Street Smarts Versus Book Smarts
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
Too many companies have been very successful after being started by High School drop outs. Others have success by individuals dropping out of college to start their business. Others who have a 4 or 6 year degree end up flipping burgers. Does a degree really matter in the "real world"? What is your outlook on this?
For every high school dropout that 'made it' there are 100 that have a food stamp card. It obviously does happen, but all you hear about is the few times it does, and the multitudes that failed miserably aren't on the news.
If you want to be an entrepreneur, find a top entrepreneurship program. You'll get a solid mix of accounting, finance, marketing along with specialized coursework on making pitches to investors and evaluating opportunities. You'll also have loads more solid connections, potential investors and an alumni network to work from. And if sh** hits the fan with your venture, you've got a solid base of skills plus a degree to fall back on while you put your life back together for a second attempt.
Jon Holdman the concept of luck I did not want to bring up. Some would say those on the side lines would use luck as the sour grapes answer - he was lucky & I will never be as lucky as that person. However, timing meshes with my other thread on accident or choice about being in real estate. If you are in the right place at the right time with the right smarts and the right tools to get the job done - is it luck or were you there by choice?
Looking back at our own investing - there is a lot of lucky choices that were made allowing us to get out of one product at the right time and move into another area of real estate. There was no deep planning on our part - we just acted and were lucky in our actions. If things had turned the other way we might have been the ones on the sidelines talking about how lucky others were in their choices.
David Egger I was not using entrepreneurship as the search word. I had been looking for real estate investing courses. The list you provided shows some very good options to choose from.
Thanks for pointing me in the right direction!
What are those catch phrases? "Fortune favors the bold." "Making your own luck." I totally believe that taking the right actions can position you for success. Having the right skills and knowledge give you opportunities those without the skills won't see or be able to take advantage of when they come along.
One of Gladwell's examples is Jewish lawyers in New York in the 50's (I may have my date wrong, my copy is at work.) These guys were real lawyers with real law degrees and all that. That's the hard work part. But they were discriminated against and couldn't get "good work" in downtown NY. So they moved out of town and started doing mergers and acquisitions work. That was considered scum work at the the time. That's the luck part. Bad luck, in this case, to be Jewish and in the wrong place at the wrong time. But it didn't last. By the 80's (again, dates may be off), M&A was big, big business. So these guys had the last laugh and made a fortune.
We've all head the story of Bill Gates getting the contract to make DOS for IBM because the guys who were making the alternative wouldn't come to the door when IBM came knocking. But long before that Bill Gates lived in an area where there was a computer club. And his family had enough money his mom was able to buy him access to a mainframe computer.
A few things on this topic:
- Regarding higher education. I don't believe that an undergraduate college degree will give you a huge edge as an entrepreneur. What it will often give you is the ability to get your foot in the door as an employee to see how real companies work, to see how an industry works and to build a network of contacts within an industry that gives you a competitive advantage when you're ready to start your own company. It's not the degree that's (necessarily) the benefit, but the doors and telephones that the degree will open up.
- Regarding "specialized degrees." This is where I think a lot of people don't fully grasp the value of a great business school. As David Egger has pointed out, a great business school education is perhaps the largest predictor of entrepreneurial success of any factor I've ever seen. As someone who spent a long time working in Silicon Valley with some of the biggest VCs, entrepreneurs and CEOs in the world, I can attest to the correlation between a degree from a great business school and entrepreneurial success. At a great business school, you don't spend the majority of your time sitting in front of a professor listening to a lecture; you spend the majority of your time sitting in front of world-famous business-people who are offering their mentorship or you are spending your time creating real business plans, building real businesses, pitching to real investors and getting real-world feedback on real ideas. Btw -- and I say this will all seriousness -- if you want a big-name VC to take your call, just say you came out of Stanford Business School or HBS. They'll take you're call.
- Regarding luck. As Jon Holdman pointed out, luck is a huge contributing factor to success in general. Would Bill Gates or Steve Jobs have been successful if it weren't for Microsoft or Apple? Maybe, but far, far from certainly, and almost certainly not nearly as successful (in my opinion, Steve Jobs was a lot more likely to have been successful without Apple than Bill Gates without Microsoft, but that's outside the scope of this thread). Hard work can make you successful; luck is just the multiplier. I'm a perfect example of this. I've made over $1M in two industries/careers (real estate isn't yet one of them). Hard work got me to the point where I could make money in those endeavors; luck got me to the point where I was able to make a lot of money. Specifically, I was lucky that I was born a white male in the United States in a time of unprecedented prosperity and technical advancement; I was lucky to get out of college during the technology bubble and to join a couple companies that provided a lot of compensation in the form of stock options; I was really lucky that a ten came on the turn when I most needed it to; I was lucky that I was able to get on an earlier flight than the one I had booked; there are a million reasons why I was able to take the skills I had and translate it into a good bit of money...but, a decent amount of it was simply luck.
- Btw, I'm hoping to be able to make real estate the third industry where I can make over $1M. There has been lots of luck involved in that. The fact that I started in 2008 (instead of a year or two earlier or later) is the biggest contributing factor to that. While I think I'm a smart guy with a good bit of business experience, I'm fairly certain that most of the people on this forum could have accomplished what I accomplished in real estate (perhaps a lot more) had they started at the same time, place and resources that I started with -- and much of that time, place and resources has a lot to do with luck.
I think it's a passion and drive that one holds to their business.
Like if I wanted to open a pet shop, it wouldn't be my thing and I'd loose interest and probably get shut down. Now if it was something I was truly was passionate for, and didn't just think $$$ but more, "I'm going to love doing this. Even for free." Then, even when times are rough, and everything is going wrong, in that position I'm going to put in extra time, get creative, and make every cent go a long way because I'll be doing it for the happiness it brings and the joy and pride it would bring me for putting in the work. Even if it was for free.
I think schooling has no significant advantage besides maybe getting easier funding, but the one's who have the passion are able to string things together with as much as they can get either way. I really don't think schooling can give much more in terms of getting things done and how to run a business. There are plenty of books and free resources that will cover business structure, economics, raising capital and everything else you could think of. Getting things done comes back to passion and willingness to make that leap. It's more of the title the school give to your credit then a better understanding of business over the long run. I base this off the confidence that I'm sure I could learn just as much with books/free resources. I'd imagine that much of schooling is "filler" and common/useless knowledge for the most part and some good stuff. It may follow the 80/20 structure. For business anyway. In my field (medical), you 100% need schooling as a guarantee of competence since you're working with others lives. You could probably learn the medical field from books/free resources too though. But here's where a prestigious school may actually give you a knowledge edge though, like better surgical techniques, or some crazy things.
J Scott I agree that colleges tend to teach you to be a good worker/servant for a large corporation. Never really tried to get into the big name universities.
Sometimes, looking back it seems that real estate is so easy that any one should be able to make their fortune investing. But whether by accident or by choice many do not and 95% of Americans will reach retirement without enough to support themselves.
Great topic in which many people are very passionate. I had good grades all through school and some college but I did drop out of college after reading books like crazy and learned more of what I felt was important to my future. I have a drive to learn everyday and that was essential. When I studied in college I took business and accounting classes. I recommend that everyone should take accounting classes because if you can understand the concepts you can start a business in any form from real estate to flowers. Now I guess I'm not a true dropout as I have completed trade school and am a journeyman millwright.
So at the end of the day education is vitally important and if a person needs a structure such as college to get this education they should prolly go that path and they will prolly need to remain an employee as if they cannot gather the drive to learn without structure they probably also cannot work in the marketplace and need an employer as well. As others have mentioned, college is also essential for many careers so that must be considered as well. Just learn and grow daily through whatever means it takes.
I'm LD (learning disabled) and I graduated high school with a 6th grade reading and comprehension. When I say graduated I say that as in I walked with my class and my diploma has a silver seal not a gold seal like the rest of my class.
I took a different reading class then the rest of the kids. When it was test time I would have to get the teachers to read some of the stuff to me out loud or they would pull me out of class and a random teacher would read the questions. At the time you did not need a second language so I was good on that.
I did do some collage, but could not get over the reading stuff. I did great with computers and math. I ended up as one of the top kitchen, bath, and floor people around at 25.
I think of student loans as STD's. There is not much of a difference and once you get them chances are slim you will find a way to get ride of them.
Every time I hear about a question like this I think about cultures of people. There are some cultures that have no common sense and can not work with there hands, but there are also cultures that have common sense and can work with there hands. In the last few years I have seen a culture of people that would make great door stops. With the “no one left behind” that is being pushed in schools that are creating a culture that is unable to take criticism.
I told my kids I would pay 300% for any tread school they did, but would only pay 50% of any non trade related classes.
Some investing is easy. Rehabbing/flipping is easy. Lonnie deals are easy. Owning a rental or two is easy.
Some investing is difficult. Buying and managing thousands of units is difficult. Starting and managing a REIT is difficult. Developing large commercial projects is difficult.
I agree that anyone can probably do the first group. I don't think that anyone will be able to do the second group. And to be well-positioned to do the second group, you need a certain set of skills:
- Ability to create detailed business models and plans;
- Ability to raise large amounts of capital;
- Ability to understand complex financial models;
- Ability to build and manage large teams;
- Ability to systematize and optimize on a large scale.
Most people don't have these skills and will never have the opportunity to easily acquire them. The easiest way to acquire these skills is to attend a good business school, find a great mentor to take you under his wings or get experience working for a large company. All of these things are more easily accomplished with a college degree.
But, I do agree that it's not absolutely necessary. People have accomplished much more with much less...but they are the exception, not the rule.
Sure it matters for some people. It says you can achieve goals, and like some have said it may be a critical element to achieving licensing in a chosen profession. For others it doesn't matter. I use a combination of the two.
The title of this thread betrays a wrong approach to this, however. It is not one vs. the other and neither side has any business adopting a superior attitude towards the other. That kind of prideful arrogance will the be the downfall of any type of intelligence. Find what works for you and move forward. Don't worry about what someone else has or doesn't have.
Here is a list of 4 graduate classes that are offered at UT Arlington that if completed earn you a graduate certificate in real estate development. These classes would also count towards a master's degree if you wanted to go further and take more classes.
REAE 5314 – Real Estate Development
REAE 5319 – Real Estate Finance
REAE 5321 – Real Estate Investments
REAE 5334 – Real Estate Appraisal
I asked a real estate developer I am working with on a project (helping him with some engineering advice) if he thought it would be helpful to earn this graduate certificate if I wanted to get into corporate real estate - working for someone else. He said he thought it definitely would.
In fact, he is a developer himself who is doing his own deals and has been for a while now. But, back in the 80's, he graduated with a business management degree and went into retail development as an employee for Ross Perot. That is how he made a living and learned the business. Without the degree, Ross Perot Co. would not have hired him. Had he not worked for Ross Perot, he'd have not learned to do what he does now for himself.
I think real estate is cool, own a rental and can easily figure out how to get a handful of rentals to set up retirement. But I don't know squat about site selection or really anything else that leads a developer to make a successful, sytematic, unbiased, scientific decisions on what site to make an offer on, how much to offer, who to involve, etc, etc, etc.
Any developer pros here have any opinion?
There are many ways to make it in this world. When I think about the most successful people I know I see a lot of different backgrounds and a lot of different experiences. One thing I have noticed though is that almost all of them have college degrees. Do I attribute their success to their degree? Not usually, but I believe people who end up being successful are those who are the type to want to pursue further education.
This is not always the case as laid out multiple times throughout this thread, just what I have seen. One thing to note about the those commonly noted billionaire drop-outs...they are generally FREAKISHLY intelligent, beyond 99.9% of the population, so I am not sure that citing them as examples for others is a great idea.
Street smarts? Depends on what street one learns on. I wold not have gotten into FDIC without the degree. Without FDIC I wouldn't have gotten into banking. Without banking I would never have been in the mortgage business. If I had not made loans in RE I wouldn't have been doing commercial lending. Without involvement in commercial lending I would never have become partners in various business operations. If I had not done that I wouldn't have sold out and I' doubt I would have retired at 55! While I made a ton in lending and RE, I made more selling my business interests. And to back up, if I had not had a formal education I doubt I would have seen the opportunities in other industries or have been accepted by other professionals (socially and professionally) to earn a seat at the table so to speak.
As an example, I made a home loan to an engineer, then he came to me for a business loan. He needed help and we struck a deal. He was also a heck of marketing guy. We started a steel fabrication business and made communication and computer racks and switching boxes. AT&T, Alltel, and large data processing centers use these products. Those gray boxes you see on cable TV lines and switch boxes sticking up out of the ground could be ours. Anyway, we put other investors together and he bought me out. :) This would not have happened with him had I only had street smarts.
There were other business transactions and RE developments as well and had I approached others simply as a street wise Realtor type,instead of a finance guy, I doubt anything would have happened.
My degrees did not come with any guarantee and alone are not a ticket to success, but it sure made the road alot eaiser for me.
You may also find that those you went to college with or alumni are very approachable in business, not sure how the highschool thing works out. :)
i think the successful high school drop outs we hear about are the exception to the rule, there are literally millions of drop outs who DO NOT see any success , my opinion is that an education is a great safety net.
Regarding my comment above about the value of a great business school, I saw this today:
http://www.bizjournals.com/sanfrancisco/blog/2012/10/stanford-grad-firms-equal-10th-biggest.html
I agree that being in the right place at the right time makes things MUCH easier and have posted that many times. Agreed that it depends on the degree as to whether it will be extremely rewarding. The rewards could be financial (like business people) or gratification (like teaching). These are very different in most characteristics.
Unfortunately, we're in a different world/economy now and a shingle on the wall may or may not lead to employment. Hopefully that will change in the future. I've tried to teach my kids independence and self sufficiency. I don't care what path they choose- but they know I DON"T expect them to return home.
I have a grand son attending a good entrepreneurial University. I hope it works out for him. He is lucky/good in that he has more than full ride so he won't be saddled with any part of that 1trillion plus of student debt...
I think ANY type of smarts is certainly helpful and contacts make a huge difference imo. I remember my start in RE and feeling I was just spinning my wheels. My Broker asked me if I'd ever been to the drags (he raced Baja 1000 each year). I said no and he explained dragsters and how they spin their wheels and then take off like bat out of hell. It helped and I'll never forget that encouragement. he also suggested I make a goal of being 1 million dollars in debt.
His thoughts were that if I could get 1 million in debt, with RE benefits, I'd be off to the races. It was excellent advice in my life. Rich