PayPal Co-Founder: I'll Give $100,000 To Teens Who Drop Out Of School

The co-founder of PayPal is putting his money where his mouth is.

Peter Thiel, 42, is backing up his claims that higher education doesn't prepare students to be successful entrepreneurs by offering 20 kids under 20 up to $100,000 to drop out of school to work on their business ideas.

Thiel calls it "stopping out of school," implying that they can put their formal educations on hold and then go back if and when it's convenient. He's said he'll be accepting applications through the end of the year.

"I do think there are a lot of things people learn in school," he told TechCrunch's Sarah Lacy. "I don't think they learn much about entrepreneurship."

Let's step back and look at Thiel himself. At first glance he's the success story every would-be-Zuckerberg dreams of becoming. He co-founded PayPal at 31 and sold it to eBay after four years for $1.5 billion. He was the first investor in Facebook, earning him another huge pot of cash, and now he runs a venture capital firm and a hedge fund.

Sure, Thiel has a gargantuan amount of personal wealth, made by thinking outside the box. What else does he have? College degrees. The Internet whiz earned a B.A. in Philosophy from Stanford University, followed by a J.D. from Stanford Law School. He's even taught classes at Stanford Law.

Thiel complains that modern-day higher education is more likely to cripple a young person with debt than it is to give them the freedom and the tools to pursue their big ideas. And he's got a point - the price of college is soaring far above the inflation rate, bankrupting many families who want what's best for their children. Paralyzed by fears of monthly debt payments (and, for many, trapped by the fine print of private student loans), many graduates do choose "safe" jobs that pay the bills over riskier start-ups or their own projects.

"You're going to have to take a lot of risks to build the next generation of companies," Thiel told Lacy.

But dismissing higher education as an obsolete way of preparing students for successful lives is ignoring Thiel's own college degrees. Surely his philosophy background helped him create a personal decision-making framework. And a law degree comes in handy when choosing when, where and how to invest. Yes, Bill Gates and Mark Zuckerberg both dropped out of Harvard University to pursue their ideas, and look where they ended up. But as University of California, Berkeley scholar Vivek Wadhwa writes, "To build a business, you need to understand subjects like finance, marketing, intellectual property and corporate law." That initial idea is vital, but it only gets you so far. For most of us, a college degree still means higher earning potential and more financial security.

Kudos to Thiel for spotting young inventors the cash they'll need to pursue their ideas. But if he really wants to equip the "next generation of companies" to succeed, he should make sure they know about patents, public relations, principles and personnel. Hmm. Maybe he should send them to college!

Photo credit: TechCrunch50-2008