From the Introduction and Summary:
The popular image of American tech entrepreneurs is that they come from elite universities: 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. But, even though Bill Gates and Steve Jobs founded two of the world's most successful companies, they are not representative of technology and engineering company founders. Indeed, a larger proportion of tech founders are middle-aged, well-educated in business or technical disciplines, 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. From 1995 through 2005, skilled immigrant founders established 25.6 percent of all the startups nationwide, and 52.3 percent of those in Silicon Valley. This group tended to be highly educated in science-, technology-, and engineering-related disciplines. The majority came to the United States to study and decided to stay. These immigrant tech founders typically established a company thirteen years after coming to the United States and tended to gravitate to technology centers across the country.
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 through 2005. These companies, identified from an existing dataset of corporate records in Dun & Bradstreet's Million Dollar Database, have more than $1 million in sales, twenty or more employees, and company branches with fifty or more employees.
We observed that, like immigrant tech founders, U.S.-born engineering and technology company founders tend to be well-educated. There are, however, significant 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 tech founders was thirty-nine when they started their companies. Twice as many were older than fifty as were younger than twenty-five.
- The vast majority (92 percent) of U.S.-born tech founders held bachelor's degrees. Additionally, 31 percent held master's degrees, and 10 percent had completed PhDs. Nearly half of all these degrees were in science-, technology-, engineering-, and mathematics- (STEM) related disciplines. Onethird were in business, accounting, and finance.
- U.S.-born tech founders holding MBA degrees established companies more quickly (in thirteen years) than others. Those with PhDs typically waited twenty-one 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 years respectively).
- U.S.-born tech founders holding computer science and information technology degrees founded companies sooner after graduating than engineering degree holders (14.3 years vs. 17.6 years). Applied science majors took the longest (twenty years) to create their startups.
- These tech founders graduate from a wide assortment of schools. The 628 U.S.-born tech founders providing information on their terminal (highest) degree, received their education from 287 unique universities. But degrees from top-ranked universities are over-represented in the ranks of U.S.-born tech founders. Ivy-League universities awarded 8 percent of the terminal degrees to U.S.-born tech founders in our sample.
- The top ten universities from which U.S.-born tech founders received their highest degrees in our sample are Harvard, MIT, Pennsylvania State University, Stanford, University of California- Berkeley, University of Missouri, University of Pennsylvania, University of Southern California, University of Texas, and University of Virginia.
- U.S.-born tech founders with Ivy-League degrees tend to establish startups that produce higher revenue and employ more workers than the average. Startups founded by those with only high school education significantly underperform all others.
- Nearly half (45 percent) of the startups were established in the same state where U.S.-born tech founders received their education. Of the U.S.-born tech founders in our sample receiving degrees from California, 69 percent later created a startup in the state; Michigan, 58 percent; Texas, 53 percent; and Ohio, 52 percent. In contrast, Maryland retained only 15 percent; Indiana, 18 percent; and New York, 21 percent.