University of Arkansas

Walton College

The Sam M. Walton College of Business

Wildly Successful College Dropouts: Is a Degree Really Necessary?

College Dropouts

October 3, 2019 | By Matthew Waller

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Entrepreneurship is a strategic endeavor of the Walton College. But I’ve been challenged more than a few times over the years by leaders who suggest entrepreneurs don’t need a college degree, much less a degree in business. They have some high-profile examples to use when making their case, and I often feel the need to explain, and in some cases defend, why we put so much money and effort in researching and teaching around innovation and entrepreneurship.

It hit me that if I, as the dean of the college, couldn’t make an iron-clad case for its importance, then we might need to refocus our efforts elsewhere.

The obvious path to follow was the educational backgrounds of founders who built successful companies. We all know that companies such as Apple, Facebook, Microsoft and Virgin Group were founded by visionary leaders who never finished college. But I wanted to know if they were the examples to follow or the exceptions.

I began by looking at founders of companies on the Fortune 500, a well-known and respected standard for success in business. But I realized pretty quickly that there were inherent flaws in studying those companies. Determining their founders is like untwisting a pretzel. ExxonMobil, No. 2 on the list, has corporate roots that go back to Standard Oil, which was founded in 1870 by John D. Rockefeller. Verizon was founded in 2000 with the merger of Bell Atlantic and GTE Corp, but you can work your way back to Alexander Graham Bell as its historic founder.

After a detailed look at the top 50 companies on the Fortune 500 list, I decided seven didn’t have easily identifiable founders—Fannie Mae and Freddie Mac because they were founded by the government and Citigroup, Marathon Petroleum, Anthem, IBM and MetLife because they were formed by mergers and acquisitions that make it difficult to designate a founder or co-founders. Of the other 43 companies, at least 25 had a founder or founders who had earned a college degree, including at least nine with a founder who earned a degree in business. And four others had at least one founder who studied at least some business in college.

This was interesting, but it felt insufficient. It painted more of a picture of founders of the distant past than of founders in our modern economy. Many of those companies have been around for more than a century. John D. Rockefeller, Henry Ford and John McKesson came of age when attending college wasn’t common and few universities offered a business degree.

When I narrowed my focus to more recent founders on the Fortune 500 list, I found people like Warren Buffet (Berkshire Hathaway), Sam Walton (Walmart), Steve Jobs and Steve Wozniak (Apple), Jeff Bezos (Amazon), Richard Burke (United Health Group), Stanley Goldstein (CVS Health), Sol Price (Costco), Larry Page and Sergey Brin (Alphabet), Robert Walter (Cardinal Health), Charles Walgreen (Walgreens), Bill Gates and Paul Allen (Microsoft), Bernard Marcus and Arthur Blank (Home Depot), Ralph Roberts (Comcast), Michael Dell (Dell Technologies) and Fred Smith (FedEx).

All 19 of those founders attended college, 15 of them earned some sort of degree, and nine of them earned a degree in business. The four who never graduated from college – Steve Jobs, Bill Gates, Paul Allen and Michael Dell – all did pretty well in business, to say the least, but none of them are (or were) anti-higher education.

In many ways, their time in college helped them formulate and launch their businesses, and three of them are all well-known for their education-related philanthropy – Gates ($20 million to MIT), Allen (more than $100 million to the University of Washington, Washington State, Tufts University and Stanford), and Dell (around $50 million to the University of Texas Medical School).

As relevant as those founders are to our economy, it still felt like I wasn’t looking at prototypical modern entrepreneurs. That’s when it hit me to look at growth rather than just size. The Fortune 500 lists companies by the size of their revenue, and many of them are growth-oriented. But the Inc. 5000 ranks the fastest-growing private companies in the United States over a five-year period, which provides a glimpse into here-and-now entrepreneurial founders who are on the rise.

Click to zoomThe top 10 companies on the 2018 Inc. 5000 had seven founders who had earned at least one degree in business, while the other three all had at least one degree in some other field. The top 10 on the 2019 Inc. 5000, meanwhile, had 14 founders (four of the companies had co-founders). The bio information I found for one of them didn’t specify his degree track, only that he had a bachelor’s degree. The other 13 of all spent some time studying business in college, eight earned at least one degree in business (B.A. or higher), and only one didn’t complete a degree of some type.

I also found plenty of diversity in their studies. Most had traditional business degrees with a focus on things like accounting, economics or finance. But one studied business in community college before launching into entrepreneurship. One was a medical doctor, but he also earned an M.B.A. And one studied apparel industry management and business management at the Fashion Institute of Design and Merchandising.

Click to zoomAnother interesting tidbit I found when looking at the 2019 Inc. 5000 was that five companies have made the list for 14 consecutive years – Mobility Works, Jarrett Logistics Systems, G&A Partners, Total Quality Logistics and Pacific Dental Services. That’s an incredible track record of consistent growth for those companies. All five have a founder with at least one college degree, and three of them have at least one founder with a business degree.

When I survey the modern entrepreneurial landscape, I see an interdisciplinary approach to innovation. Great minds in engineering or the arts, for instance, partner with business-oriented entrepreneurs and combine their strengths to create successful companies. There are all sorts of ways for founders to attain the business acumen they need. But I’m convinced that the entrepreneurs of today and, more importantly, of tomorrow benefit greatly by earning a degree in business. In fact, my research in this area also led me to write an article about the nine fundamental areas of business that entrepreneurs need to study to enhance their chances of success.

There is no single can’t-miss path for an entrepreneur, of course, and there will be challenges no matter which course a leader takes. But my study, and my experience as a founder of a company, tells me that a college degree in business provides the perfect foundation for success.

Post Author:

Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair, and professor of supply chain management. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.

Waller is an SEC Academic Leadership Fellow, and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain” published by Pearson Education.

He received a B.S.B.A. summa cum laude from the University of Missouri, and a M.S. and Ph.D. from Pennsylvania State University. He is the former co-editor-in-chief of Journal of Business Logistics.