THE BLOG
08/15/2012 02:37 pm ET

Peter Thiel's Millennial Fellows Are Going to Be Just Fine

It was pouring on Princeton's Lake Carnegie when the tiny coxswain heard her phone ring. She kept her eyes on the boat. A science fair fanatic who'd spent her childhood tinkering in her Calgary basement, Eden Full had come a long way to this Ivy League reservoir and most stereotypically collegiate of sports. But soaked on the dock after practice, she gave it all up, returned the call, and on the spot accepted $100,000 to quit college and become a solar-energy entrepreneur.

Just 20-years-old and four-foot-eleven, Full stands out among startup CEOs. She began working with photovoltaics at age 10, soon directing her artist father to help weld early versions of her "SunSaluter" -- a $20 device that makes solar panels up to 40 percent more efficient, potentially revolutionizing electricity generation across the developing world. At 18, she piloted her product in Kenya; and last year, she left Princeton after winning a controversial grant from libertarian internet entrepreneur and investor Peter Thiel, who is catching flak for using part of his enormous fortune to entice bright kids to skip college and launch companies. At first, visitors to one of Full's new offices looked past her, asking in confusion where her parents were. A year later, she'd won $300,000 more from other organizations and hired a former Boeing engineer as her intern.

"People say because we're young, we're not ready for the real world. Well, of course we're not ready - that's why we have to just do stuff," Full said in an interview, reflecting on the last year. "If I don't know something, I do it, so next time I do it better. Just studying it isn't going to help me execute."

Critics have slammed the Thiel Fellowship as an anti-establishment indulgence - a delusional and destructive plot to lure kids from the certain, if conservative, return of a traditional education. But fellows like Full don't seem phased by the hype. Lost in the uproar over their eccentric benefactor and prodigy reputations, most of them just want to build things, and are pragmatically glad for support. In this, they're typical of their generation: a networked mass of some 85 million so-called Millennials, whom studies suggest are less ideological and more entrepreneurial than their predecessors, more driven to chart their own course. Thiel could not have scripted a group better suited to his Twainish "never-let-schooling-interfere-with-your-education" philosophy.

Thiel's inaugural batch of 24 fellows is now halfway through the two-year experience. More than 10 have registered companies; at least one closed an investment round; and another sold his venture, live music platform GigLocator, for a reported six figures. As a new class now begins the program -- its four-month application process documented by CNBC in a two-part series that airs this week -- Full's colleagues have compiled a simple Google doc of advice that reflects their odd blend of Silicon Valley celebrity and college kid innocence. "Understand the uniqueness of the opportunity... Ask and usually you shall receive.... Don't blow it when meeting important people... Order coffee instead of lattes because it's cheaper," the document advises, according to fellowship director Danielle Strachman, who shared excerpts aloud in an interview.

"This is not a race; it's not about that at the end of two years, you have a company started and you've raised all this money," Strachman said. "The grand experiment is if in 10 years these people look back and say, 'That fellowship really helped me launch into an untracked place.'"

To critics, though, the program appears more threatening. Its most generous opponents compare it to the NFL drafting college athletes who quit school for the pros: few make it big, and the rest are left with no degree and slimmer prospects. Others are harsher, with Slate Group editor-in-chief Jacob Weisberg trashing it as part of a larger, tech-savvy libertarianism, a narcissistic effort to replicate Thiel's "narrow-minded focus on getting rich as young as possible." Forbes called it one of Thiel's "most provocative acts."

But for Thiel, "provocative" may just be a compliment. His writings, on everything from political correctness to the probability of apocalypse, have raised eyebrows since college -- yes, he has a bachelor's and JD from Stanford, where he even teaches on occasion. Now 44, the PayPal cofounder and early Facebook investor has made a career as a contrarian, famously foreseeing the dotcom and housing bubbles. He invests in futurist industries including genomics and private space travel; and his philanthropy funds endeavors in artificial intelligence, "curing" aging, and a movement to build independent, floating communities in the sea. Incenting budding tech entrepreneurs to leave school to build things hardly seems provocative by comparison.

Thiel's case for the fellowship is two-fold. First, the world needs more bright minds working on transformational technologies in energy, biotech and advanced software, and fewer designing mobile apps. As the motto for his VC firm, Founders Fund, protests: "We wanted flying cars, instead we got 140 characters." Second, he says, the U.S. university system is broken, part of an "education bubble" and "college conspiracy" that saddles students with irrelevant information and crippling debt. Instead of studying, Thiel says, young people should "do," using his "no-strings-attached grant of $100,000 to skip college and focus on their work, their research, and their self-education," according to the fellowship website. Quitting school is cast as the quickest means to needed innovation.

"We have a society where successful people are encouraged to go to college, but it's a mistake to think that's what makes people successful," Thiel told 60 Minutes last year. "It's not causal. Harvard does a great job at picking the winners, and therefore it should get very little credit for turning people into winners."

Thiel is not exaggerating the student debt crisis. Real college costs have tripled since 1981, according to the College Board; student loans now top $1 trillion, making them the #1 source of debt in the country, at least 15 percent bigger than revolving consumer credit including credit cards, with higher delinquency rates than mortgages or car loans, Consumer Financial Protection Bureau and Federal Reserve data show. Unemployment -- highest among 20-24 and 25-34 year-olds, at 13.5 and 8.2 percent in July -- makes it tougher for graduates to repay those loans, even as a 2005 act limits their ability to discharge them through bankruptcy.

Yet as technology changes the economy's structure, employers are looking for innovative self-starters who can keep their firms competitive -- that is, they're looking for extra skills not always learned in school. Some 29 percent of employers called entrepreneurial experience an important factor in hiring, according to a May study by the Boston-based Millennial Branding consulting firm, although less than 7 percent of the adult U.S. population own their own businesses.

That appetite for initiative resonates with Millennials who, born roughly between 1980 and 2000, are more entrepreneurial by both nature and necessity. Famously self-entitled, they're often comfortable taking risks; digitally native, they've seen an avalanche of online options slash startup costs; and, in the wake of the financial crisis, they trust themselves more than big business or government. They want to have a concrete impact and control over their lives, and see their own ventures as an avenue.

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A beige plush armchair sits forgotten in the fenced front yard of a corner bungalow in Palo Alto, where a group of fellows dragged it on a whim to pick a loquat tree weeks before. As at many student houses, there's a barbeque out back and skateboards in the living room, a pull-up bar in the hall doorframe and overflowing trash bags in the kitchen. But when Darren Zhu comes home, he changes into flip-flops to keep the dark hardwood floors clean. Zhu, a 20-year-old synthetic biologist, lives here with four other Thiel fellows: a statistician, a web designer, a robotics researcher and a biogerontologist (who, at 18, has been working to slow aging). A few other fellows stopped by the night before, talking politics -- Zhu says they're still exploring as many political systems as possible -- and singing Billy Joel and R. Kelly songs as he played the piano.

A high-school tennis player and conservatory pianist, Zhu fell into science early with kindergarten visits to the medical-imaging lab where his father worked for a future Nobel laureate. He chose Yale for college specifically because it suited his wide-ranging interests, and soon found himself traveling Europe with the school carillonneurs, a selective team trained to regularly ring the university's centuries-old bells. So it was that he stood overlooking campus from a 200-foot tower when he got the call offering him a Thiel fellowship. Now, he plays the bells and pickup basketball at Stanford, buying used research equipment for his own lab in a step toward the biotech startup he has thought about since high school. The Gates Foundation just gave him another $100,000.

"It always appealed to me to have something that I built myself, that I'm in charge of and dictate the progress of -- this idea of both empowerment, but also eventually impact," Zhu said in an interview. "We have a platter of things that we pick and choose from today, and we don't really care too much for the system to choose what we're defined by."

That sentiment echoes across Zhu's Millennial generation. Forty-six percent of 18-25 year-olds say they hope to start their own business in the next five years, more than double the rate for Baby Boomers, according to a 2011 poll for small-business insurer Employers. A 2010 survey for the Kauffman Foundation had similar results, noting the three top reasons 18-24 year-olds want to launch their own ventures: "to use my skills," "to build something for my future," and "to be my own boss."

Part of the pull is of course the Zuckerberg effect: the startup cool factor and promise of hitting it big. But, having watched their Gen X/Boomer parents punch the clock for decades, many Millennials also want something more meaningful: More than money, they want to be recognized for building things that are creative, Michelle Dagnino, a consultant and speaker on generational change, said in an interview. Even within a large company, Millennial employees say that "innovation" and "societal development" should be business's two top priorities, while their older counterparts still list "profit" and "value," Deloitte's 2011 Millennial Survey found.

Although their instant-gratification, networked natures can breed frivolity and groupthink, those same traits can also make Millennials more independent. Web culture has taught them to find anything anywhere at anytime -- sampling individually as it suits them and teaching each other online, bypassing rather than overthrowing old centers of authority. Thiel's fellows have been to magnet schools, private schools, home schools and graduate schools; summer camps, science fairs, laboratories and libraries -- to say nothing of the online worlds they're constantly rebuilding. In that sense, the fellowship is just the latest stop on a kind of intellectual shopping spree that's increasingly characteristic of their age group. "Millennials have the ability to self-learn," relying on their own networks to identify and reinforce new ideas and goals, said Scott Beale, author of Millennial Manifesto, a 2003 book on the generation's politics. "They're surrounding themselves with other people who say to them, 'Yeah, you can do that,' as opposed to being dominated by an older generation that tells them that they can't do things."

Forced to adapt to those interests, colleges are experimenting with open online courses and now offer more than 5,000 entrepreneurship classes for enrolled students, up from 250 in 1985, according to the Kauffman Foundation. Independent programs like Boston Startup School and Bold Academy provide crash courses in business or leadership; while hundreds of traditional accelerators and incubators drill those with more investor-ready business plans. Schools from Stanford to the University of Pennsylvania grant students leave to work on new ventures; and at the Thiel Foundation, Strachman runs a monthly call for entrepreneurial education programs that would become college alternatives. One of them, New York-based e[nstitute], pairs 18-24 year-olds with entrepreneurs for two-year apprenticeships that are intended to replace school as well as traditional corporate internships.

"Big companies just aren't as appealing or interesting or even credible as they once were," pushing more young people to look to startups as training grounds, e[nstitute] cofounder Shaila Ittycheria said in an interview. "People are trying to associate themselves with where they think that credibility, that success and value, lies."

Clearly, value still lies in a college degree, too. While there's debate over just how much more a graduate earns in a lifetime, estimates range from $280,000 to nearly $1 million. And for the majority of kids who don't know what they want at 18, school can still expose them to a wide world that shapes their lives. "I actually don't think college is bad," Ittycheria added, herself a Harvard Business School graduate. "It's just that one solution should never be forced down everyone's throat. If anything, why not give people a chance to figure out what they actually want to learn first?"

For those few kids who are clear enough to have companies they can't wait to launch, the people who hold the keys to their futures -- venture capitalists -- openly say they don't care about school. VCs invest in people who've dropped out of college all the time; what matters is an entrepreneur's ability to execute and stay committed to the venture. Thiel fellows, in contrast, are free to abandon projects or shift course at anytime; and even if they do launch a business, Thiel gets none of the first-dibs equity that most accelerators and VCs require. And when their two-year program is over, nothing prevents fellows from going back to school. Full already plans on returning to her scholarship; meanwhile, she has found a way to keep her favorite part of college alive, by joining an ex-Olympian on Canada's national development rowing team.

"One day when I'm 30 and I'm doing all this, no one will care that I was the one doing it; they'll care what the technology was. The only reason people are so interested now is because I'm so young," Full said of her solar venture last year. "I'd like to be taken seriously as an adult, and if I want that to happen, I should start acting like one. So. No more pretending to be a kid. Although it is helpful at times."