Vivek Wadhwa, Richard Freeman, y Ben Rissing
Education and Tech
Entrepreneurship
The popular image of American tech entrepreneurs is that they come from elite
universidades: some graduate and start companies in their garages; others drop out
of college to start their business careers. The dot-com boom reinforced the image
of technology CEOs being young and brash. Pero, even though Bill Gates and Steve
Jobs founded two of the world’s most successful companies, they are not represen-
tative of technology and engineering company founders. En efecto, a larger propor-
tion of founders are middle-aged, well-educated in business or technical disci-
plines, with degrees from a wide assortment of schools. Twice as many U.S.-born
tech entrepreneurs start ventures in their fifties as do those in their early twenties,
as this paper will show.
Our earlier research on technology and engineering entrepreneurship revealed
that skilled immigrants were a driving force in recent U.S. economic growth. De
1995 a través de 2005, skilled immigrant founders established 25.6 percent of all the
start-ups nationwide, y 52.3 percent of those in Silicon Valley. This group tend-
ed to be highly educated in science-, technology-, and engineering-related disci-
Vivek Wadhwa is a Wertheim Fellow with the Labor and Worklife Program at
Harvard Law School and executive-in-residence/adjunct professor for the Pratt School
of Engineering at Duke University. He is also an entrepreneur who has founded two
successful technology companies, an active mentor and advisor to various start-ups,
and a columnist for BusinessWeek.com.
Richard Freeman holds the Herbert Ascherman Chair in Economics at Harvard
Universidad, and serves as Faculty Director of the Labor and Worklife Program at the
Harvard Law School. He also is Director of the Labor Studies Program at the National
Bureau of Economic Research, Senior Research Fellow in Labour Markets at the
London School of Economics’ Centre for Economic Performance, and Visiting
Professor at the London School of Economics.
Ben Rissing is a Wertheim Fellow in the Labor and Worklife Program at the Harvard
Law School, and the Project Manager of Duke’s engineering outsourcing and immi-
gration research.
This paper first appeared as a report from the Ewing Marion Kauffman Foundation.
© 2010 The Ewing Marion Kauffman Foundation
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Vivek Wadhwa, Richard Freeman, y Ben Rissing
plines. The majority came to the United States to study and decided to stay. Estos
immigrant founders typically established a company thirteen years after coming to
the United States and tended to gravitate to technology centers across the country.1,
2
What about U.S.-born tech entrepreneurs? Were they young college dropouts
or well-educated? Were they graduates of elite schools or a diverse set of schools
like the immigrant company founders? Where did they locate their companies?
To answer these questions, we surveyed 652 U.S.-born chief executive officers
and heads of product development in 502 engineering and technology companies
established from 1995 a través de 2005.
Our Findings:
• We observed that, like immigrant founders, U.S.-born engineering and technol-
ogy company founders tend to be well-educated. Hay, sin embargo, significativo
differences in the types of degrees these entrepreneurs obtain and the time they
take to start a company after they graduate. They also tend to be more mobile
and are much older than is commonly believed.
• The average and median age of U.S.-born founders was 39 when they started
their companies. Twice as many were older than 50 as were younger than 25.
• The vast majority (92 por ciento) of U.S.-born founders held bachelor’s degrees.
Además, 31 percent held master’s degrees and 10 percent had completed
PhDs. Nearly half of these degrees were in science-, technology-, engineering-,
and mathematics- (STEM) related disciplines. One-third were in business,
accounting, and finance.
• U.S.-born founders holding MBA degrees established companies more quickly
(en 13 años) than others. Those with PhDs typically waited 21 years to become
tech entrepreneurs, and other master’s degree holders took less time to start
companies than did those with bachelor’s degrees (14.7 years and 16.7 años,
respectivamente).
• U.S.-born founders holding computer science and information technology
degrees founded companies sooner after graduating than engineering degree
holders did (14.3 years versus 17.6 años). Applied science majors took the
longest (20) to create their start-ups.
• These founders graduate from a wide assortment of schools. El 628 U.S.-born
founders we interviewed received their terminal (highest) degrees from 287 uni-
versidades. But degrees from top-ranked universities are over-represented in the
ranks of U.S.-born founders. Ivy-League universities awarded 8 por ciento de la
terminal degrees to U.S.-born founders in our sample.
• The top ten universities from which U.S.-born founders received their highest
degrees in our sample are Harvard, stanford, Universidad de Pennsylvania, CON,
University of Texas, University of California-Berkeley, University of Missouri,
Universidad Estatal de Pensilvania, University of Southern California, and University
of Virginia.
• U.S.-born founders with Ivy League degrees tend to establish start-ups that pro-
duce higher revenue and employ more workers than the average. Start-ups
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Education and Tech Entrepreneurship
founded by those with only a high school education significantly underperform
all others.
• Nearly half (45 por ciento) of the start-ups were established in the same state where
U.S.-born founders received their education. Of the U.S.-born founders in our
sample receiving degrees from California, 69 percent later created a start-up in
the same state; Michigan, 58 por ciento; Texas, 53 por ciento; and Ohio, 52 por ciento. En
contrast, Maryland retained only 15 por ciento; Indiana, 18 por ciento; and New York,
21 por ciento.
METODOLOGÍA
In this study, we investigate the educational attainment of US-born start-up
founders. The primary data source for this work is a subset of an existing dataset
of corporate records included in Dun & Bradstreet’s (D&B) Million Dollar
Database. These listings contain U.S. companies with sales in excess of $1 millón, twenty or more employees and company branches with fifty or more employees. To construct our dataset, we extracted records of all engineering and technology companies founded from 1995 a 2005 (representing the most current decade of data at the time of this initial search). This produced a listing of 28,766 companies. A portion of these (less than 10 por ciento), which represented shell companies with zero U.S. employees or older companies with recent changes in control / corporate restructurings, were omitted from our dataset. The remaining companies were randomly contacted by our research team via phone or e-mail. During our inter- view requests we sought to speak directly with a company founder(s) or a direct representative to determine if the founder or founders were U.S.-born. For this work we defined “founders” as individuals holding the position of corporate exec- utive officer (CEO) or corporate technology officer (CTO) at the time of start-up incorporation. Through these interviews, D&B data, and supplemental information from company websites we gathered the following information for each of the U.S.-born founders in our dataset. • U.S.-born founder(s)’ name • Terminal (highest) academic degree: nivel, campo, escuela, estado, graduating year • First academic degree: nivel, campo, escuela, estado, graduating year (if applicable) • Second academic degree: nivel, campo, escuela, estado, graduating year (if applicable) • Age of U.S.-born founder when company incorporated • Company address, city, estado, zip code • Company primary U.S. Government Standard Industrial Classification (SIC) code We interviewed 652 U.S.-born founders of 502 engineering and technology com- empresas. Our response rate was approximately 40 percent of those we attempted to contact. innovaciones / primavera 2010 143 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Vivek Wadhwa, Richard Freeman, and Ben Rissing DEFINITIONS Engineering and Technology Start-ups For the purposes of our study, the phrase “engineering and technology” indicates that the company’s main work focuses on design, manufacturing, or services. Our definition of engineering and technology firms includes the following industry groups, identified by three- and four-digit U.S. Government Standard Industrial Classification (SIC) codes: • Semiconductors • Computers • Communications • Biosciences • Defense/Aerospace • Environmental • Software • Innovation/Manufacturing-Related Services Appendix A contains a full listing of the SIC codes associated with each industry. This list was adopted from an SIC code listing originally employed by a study authored by Dr. AnnaLee Saxenian that explored the roles of immigrant start-up founders in Silicon Valley.3 U.S.-Born Founders In most engineering or technology companies, the most critical start-up roles are those of the president/chief executive officer and the head of development/chief technology officer. An individual can simultaneously perform both roles. This work focuses on the entrepreneurial contributions of these U.S.-born individuals. Other roles, such as finance and marketing, also can be very important in start- ups, but the focus of our research is these key founders. EDUCATIONAL ATTAINMENT OF U.S.-BORN FOUNDERS Terminal (Highest) Degree Completed Technology and engineering company founders tend to be highly educated. The vast majority (92 por ciento) of U.S.-born founders hold at least a bachelor’s degree; 47 percent hold more advanced degrees (master’s, PhD, Maryland, or JD). Cifra 1 details the breakdown of the terminal (highest) degrees they completed. Fields of Education U.S.-born company founders tend to have diverse educational backgrounds. The largest group (47 por ciento) of our sample held terminal degrees in science-, tech- nology-, engineering-, y matemáticas- (STEM) campos relacionados. Thirty-four per- cent held degrees in business, finance, and accounting. Cifra 2 provides details. If all degrees held by these U.S.-born founders are considered (primero, segundo, terminal), the percentage holding at least one degree in a STEM field increases to 144 innovaciones / primavera 2010 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Education and Tech Entrepreneurship Figure 1. Terminal Degree Completed by U.S.-Born Founders. Cifra 2. Fields of Terminal Degrees Completed by U.S.-Born Founders. innovaciones / primavera 2010 145 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Cifra 3. U.S.-Born Founders’ Age at Time of Company Founding. Cifra 4. Time Lag Between Completion of Terminal Degree and Company Founding. 55 por ciento. Por ejemplo, a U.S.-born founder may complete a terminal MBA after first obtaining a bachelor’s degree in engineering. AGE AND ENTREPRENEURSHIP A common belief is that U.S.-born founders of technology companies tend to be young. We found that only 1.2 percent were teenagers when they started their firms. More than twice as many were older than age 50 than were younger than 25. Many, En realidad, were in their sixties when they founded their start-ups. 146 innovaciones / primavera 2010 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Education and Tech Entrepreneurship Figure 5. Time Lag Between Completion of Terminal Degree and Company Founding by Field of Study. Cifra 6. A NOSOTROS. Founder Age at the Time of Start-up Establishment and Terminal Degree. Degrees listed left-to-right in legend (High School; Bachelor’s; Master’s; Phd, Maryland, JD) are represented bottom-to-top in bar chart. The vast majority of U.S.-born founders were older than 25. The average and median age of key founders was 39. A breakdown of U.S. start-up founders’ ages at the time of company founding is shown in Figure 3. We found a positive correlation between U.S.-born founders’ terminal degree level (ie PhD, master’s, bachelor’s) and the period of time between graduation and start-up formation. By collecting data on the specific year a founder graduated from his or her terminal degree program and the date he or she formed the start- innovaciones / primavera 2010 147 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Vivek Wadhwa, Richard Freeman, and Ben Rissing up, we were able to calculate the length of time between these events. De término medio, this was 16.4 años. Sin embargo, this length of time was noticeably shorter for individuals with spe- cific degree types. MBA holders tended to found companies fastest, with an aver- age lag time of 13.1 años. Juntos, all master’s degree holders (14.7 años) found- ed companies faster than bachelor’s degree holders (16.7 años); both founded companies faster than individuals who hold PhDs (20.9 años). These data are shown in Figure 4. Además, we analyzed the field of the terminal degree completed by U.S.- born founders and the time to establishment of a start-up. This intermediate peri- od between start-up creation and degree completion was shortest for computer science and information technology graduates (14.3-year average) and longest for applied sciences graduates (20-year average). A breakdown is found in Figure 5 (previous page). When subdivided by a founder’s age at the time of start-up formation, our sample approaches a normal distribution. The majority of U.S.-born founders holding bachelor’s, master’s, PhD, Maryland, and JD degrees fall within the 30 a 50 año- old age bracket. It is interesting that the left tail of the distribution is dominated by high school degrees, while PhD, Maryland, and JD degrees consistute the majority of degrees held on the right tail. This information is presented in Figure 6 (previous page). UNIVERSITIES AND ENTREPRENEURSHIP We found that U.S.-born founders of engineering and technology companies tend to graduate from a wide assortment of universities. While elite, highly ranked schools hold no monopoly on tech entrepreneurship, some elite schools are over- represented in the ranks of these founders, and companies formed by these schools’ graduates outperform those established by others. Top Ten Universities Graduating U.S.-Born Key Founders The 628 U.S.-born founders in our sample received their terminal degrees from 287 colleges and universities. Almost every major U.S. university was represented on this list. The top ten institutions in this group accounted for only 19 percent of the entire sample, as shown in Table 1. Ivy-League Universities and Entrepreneurship U.S.-born founders whose terminal degree was awarded from an Ivy League school (Marrón, Columbia, Cornell, Dartmouth, Harvard, Princeton, University of Pennsylvania, and Yale) accounted for eight percent of our sample. This group was led by Harvard University, which awarded terminal degrees to just over three per- cent of our U.S.-born founder sample. Harvard was followed by the University of Pennsylvania with just over a two percent contribution. 148 innovaciones / primavera 2010 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Education and Tech Entrepreneurship Table 1. Schools/Universities Awarding U.S.-Born Founders’ Terminal Degrees. Mesa 2. Over-Representation by U.S.-born Founders with Terminal Degrees Awarded from Ivy League Universities.4, 5 innovaciones / primavera 2010 149 Descargado de http://direct.mit.edu/itgg/article-pdf/5/2/141/704642/inov_a_00018.pdf by guest on 08 Septiembre 2023 Vivek Wadhwa, Richard Freeman, and Ben Rissing By contrast, en 2005, these Ivy-league schools graduated approximately thirty- three thousand bachelor’s, master’s, and PhD degrees, o 1.6 percent of all U.S. degrees awarded at these levels (ver tabla 2, previous page). Tal como, our results show a disproportionately high concentration of U.S-born founders with terminal Ivy League degrees engaging in entrepreneurial start-up activities. While the Ivy- League schools graduated a larger proportion of U.S. estudiantes 20 a 30 years ago, they did not come close to the proportions of terminal degrees represented among U.S.-born founders in our sample. We also note that the founders from our sam- ple who graduated from Harvard University and the University of Pennsylvania held a disproportionately high number of MBAs—55 percent and 43 por ciento, respectivamente. U.S.-BORN FOUNDER EDUCATION AND START-UP SUCCESS We found a correlation between a U.S.-born founder’s terminal degree and their company’s performance. Cifra 7 displays the average 2005 sales and total employ- ment of the start-ups in our sample. En 2005, the average sales revenue of all start- ups in our sample was around $5.7 millón, and these companies employed an
average of 42 workers. Start-ups established by founders with terminal Ivy League
degrees had higher average sales and employment—$6.7 million and 55 workers, respectivamente. The success of these two groups markedly contrasted with start-ups established by founders with high school terminal degrees, which had less than half the average revenues and number of employees—$2.2 million and 18 workers.
UNIVERSITY/LOCATION OF START-UP
We also observed a correlation between the state in which U.S.-born founders
received one or more of their academic degrees (terminal, first or second) y el
state in which they eventually established a start-up. Nearly 45 percent of the
founders in our sample established start-ups in the same state in which they were
awarded one or more of their degrees. Our U.S.-born founder dataset included
individuals who received degrees from academic institutions located in 47 del
50 A NOSOTROS. estados. Cifra 8 displays a breakout of retention rates in states where at least
20 founders both received degrees and established start-ups.
SUMMARY OF FINDINGS AND CONCLUSIONS
Our survey shows that education provides an advantage in tech entrepreneurship
and that most U.S.-born founders of technology and engineering companies are
middle-aged with 16 years of work experience before they launch a start-up. El
20-year old wunderkind is the exception, not the rule.
The education that a founder receives is important in tech entrepreneurship.
But while elite, Ivy league schools are over-represented in the ranks of U.S.-born
tech entrepreneurs and achieve greater business success than others, 92 por ciento de
the U.S.-born founders come from other schools. The biggest difference in busi-
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Cifra 7. Average 2005 Sales and Employee Count Comparison.
Cifra 8. Percentage of U.S. Founders Who Establish a Start-up in the Same State
in Which They Received a Degree.
ness success is between founders with terminal bachelor’s degrees and those with
terminal high school diplomas.
Some states are more successful than others in retaining their university grad-
uates. California tops this list, but there also are large differences between
Michigan, Texas, and Ohio, which rank above average, and Maryland, Indiana, y
Nueva York, which are at the bottom.
This research raises policy questions on how regions of the country and the
country itself can foster greater tech entrepreneurship to boost economic growth.
While we do not know how some of the founders would have fared had they not
obtained higher degrees, the predominance of degree holders suggests that
advanced education has become critical, at least in the sectors covered in our sam-
por ejemplo. The majority of higher education and graduate degrees in our respondent
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Vivek Wadhwa, Richard Freeman, y Ben Rissing
body fell within founders of 35 a 44 years of age. That a large number of firm
U.S.-born founders have many years of experience in business also is important in
understanding the supply of tech entrepreneurs.
Agradecimientos
The authors thank project directors Baris Guzel and Molly House and researchers
Poulomi Doshi, Mark Marex, Tim McLaughlin, Hope Lu Sat, Varun Varghese, y
Deepak Vedanthan.
Endnotes
1. Wadhwa, v., A. Saxenian, B. Rissing, y G. Gereffi. America’s New Immigrant Entrepreneurs: Parte
Enero 2007. Available online at
I. The Ewing Marion Kaufman Foundation.
http://www.soc.duke.edu/globalengineering/papers_newimmigrant.html.
2. Wadhwa, v., B. Rissing, A. Saxenian, y G. Gereffi. Educación, Entrepreneurship and
Inmigración: America’s New Immigrant Entrepreneurs, Part II. The Ewing Marion Kaufman
Base, Junio 2007. Available online at http://www.soc.duke.edu/
globalengineering/papers_educationentrepreneurship.html.
3. Saxenian, A. Silicon Valley’s New Immigrant Entrepreneurs. Public Policy Institute of California.
1999. Available online at http://www.ppic.org/content/pubs/report/R_699ASR.pdf.
4. Institute for Education Sciences–National Center for Education Statistics (2006). Mesa 257.
Bachelor’s, master’s, and doctoral degrees conferred by degree-granting institutions by field of
study and year: Selected years, 1970–71 through 2004–05. 2006 Digest of Education Statistics.
Available online at http://nces.ed.gov/programs/digest/d06/
tables/dt06_257.asp.
5. National 2005 bachelor’s, master’s, and PhD degree production data was obtained from the
Institute for Education Sciences–National Center for Education Statistics. Individual schools’
2005 graduation statistics were obtained from 2005 commencement announcements.
APPENDIX A: ENGINEERING AND TECHNOLOGY SIC CODES
A NOSOTROS. Government-Defined Standard Industrial Classification (SIC) Codes
Industria
Semiconductors
Special industry machinery
Semiconductors and related devices
Instruments for measuring and testing electricity and electrical signals
Computers/Communications
Electronic computers
Computer storage devices
Computer peripheral equipment, n.e.c.
Printed circuit boards
Electronic components, n.e.c.
Magnetic and optical recording media
Telephone and telegraph apparatus
Radio and television broadcasting and communications equipment
Communications equipment, n.e.c.
Bioscience
Drugs
152
SIC
3,559
3,674
3,825
3,571
3,572
3,577
3,672
3,679
3,695
3,661
3,663
3,669
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Education and Tech Entrepreneurship
Surgical medical and dental instruments, and supplies
Medical laboratories
Laboratory apparatus and analytical, optical, measuring, and controlling
instruments
Defense/Aerospace
Small arms ammunition
Electron tubes
Aircraft and parts
Guided missiles and space vehicles
Tanks and tank components
Buscar, detección, navigation, guidance, aeronautical, and nautical systems
instruments and equipment
Ambiental
Industrial and commercial fans and blowers, and air purification equipment
Service industry machinery, n.e.c.
Sanitary services
Scrap and waste materials
Software
Computer programming services
Prepackaged software
Computer-integrated systems design
Computer processing, and data preparation and processing services
Information retrieval services
Innovation/Manufacturing-Related Services
Computadoras, and computer peripheral equipment and software (wholesale
comercio)
Electronics parts and equipment, n.e.c. (wholesale trade)
Computer facilities management services
Computer rental and leasing
Computer maintenance and repair
Computer-related services, n.e.c.
Engineering services
Research and testing services
384
8,071
382
(excepto
3,822,
3,825 y
3,826)
348
3,671
372
376
3,795
381
3,564
3,589
495
5,093
7,371
7,372
7,373
7,374
7,375
5,045
5,065
7,376
7,377
7,378
7,379
8,711
873
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