Throwback: College - To Go or Not To Go? | Ep 673

I had a four-year college graduate who comes out with a philosophy degree and I've got somebody who's been in sales for four years and didn't have a degree in the same age. Who do you think I'm picking for the sales job? The guy who's been in sales for four years. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion-dollar thing with acquisition.com. I always wished pesos, musk and buffet had documented their journey, so I'm doing it for the rest of us. Please share and enjoy. To go to college or not go to college, that is the question in the game of life and I'm going to show you the data so that you can make your own decision and at the very end I'll give you my honest advice. 1.76 trillion is more GDP than every country in the world besides maybe the top 10. That means that our college-dates kids, young adults, are taking on more debt than entire nations produce. At some point you have to think, are they going to be able to make that up? If you're a parent or loving relative that a young person who's making this decision is sent to, I want to talk to you specifically. I went to Vanderbilt. It's a very good school. I think it's ranked 13 that's tied with Brown as a pseudo Ivy League school. I graduated in three years, Magnet Commodity, I was president of my fraternity, I was vice president of the powerlifting team, and I did it in three. Then I went into a white collar job, managed to be consulting for two years, and then while I was at that job, I studied very hard and got above Harvard Business School's GMAT midscore. That was my plan until I started thinking a little bit more for myself about, wait, does the math really make sense here? Fast forward a decade. I now want to portfolio of companies that does a rich $20 million a year. I make these so that hopefully younger people or just people at different stages in their career can make better picks. That's my formal education side. My informal education side is that I quit my white collar job, started a minimum wage at a gym where I paid a guy to let me work for him and follow him around all day. Then I got into the gym business, scaled that to 5,000 locations in the US and our company called Jim Launch. I sold that to private equity group for 46.2 million. I now own a portfolio of companies that has over a thousand employees. I know what businesses today are actually looking for and it's not what I used to think and maybe what you used to think years ago, which is no one even looks at where you went to school or what you made you didn't or even what your GPA was. All we care about is your experience and the likely that you can do the job well. Many of the jobs that are available today, there is no school for. Because the school degrees and the things that they taught have nothing to do with how much the economy has changed. I know you care a lot about whoever you're helping make this decision. I want you to know, I care just as much and I don't benefit from either of these decisions that they choose to make, except for maybe if they do something that adds benefit to the workforce that might eventually work out of my companies. But that's really it. And so I make this as even handily as I can because I benefit it from both sides. And here's one of the worst parts about this debt. Number one is that the interest rates are high. And number two is that you literally can't bankrupt out of it. Meaning once you do this, you're stuck paying it for the rest of your life. I think that's one point for not going to college. Now what do you actually get when you pay for college? If you don't graduate high school, you make less than a million dollars for the rest of your life. Now if you do finish with the high school diploma, about 30% better, 1.3 million. If you have some college, so you go and maybe you drop out 1.5, a little better. Bachelor's degree, 2.2 million. All right, now we're more than double our high school diploma. Master's degree, 2.6. Doctoral, 3.2. And then professional degree, 3.6 million. Now that's how much you make over the rest of your life. I would say that that's a strong point for education. Now we see this really high increase in income, but it's not free. The debt that you take on for student loans, you cannot bankrupt out of, which means that until you die, you have to pay it back. And they force you to make that decision when you're 18 years old and you've never made a dollar in your life, nor can you comprehend the scope of what $250,000 of after tax income is. And the interest rates that you're paying when you make a $250,000 loan out, you're not paying back $250,000. You're paying back $400, $500,000 in post tax money over the span of your career. And so that leads naturally to like, okay, well, how's that can affect the rest of your life? Well, look at how earnings actually increase over time. And so this is important. When you look at your actual life, you're going to be saddled with relatively large payments for a long period of time and so you can actually start catching up in your late 30s and early 40s where earnings begin to spike. When are you starting a family? When are you getting married? When are you buying your first home? If that's what you want to do. And yet, you're still saddled with that debt that you cannot get out of and you have very high interest on. To me, that's a very strong point for not going. Now, the median incomes, that's over your lifetime. But those don't all happen at once. And oftentimes, earning power and income happen later on in your career. And the higher your degree, the longer it takes to actually get there. Some of these bottom ranks more or less stay flat that whole time, where some of these other ones that you have to pay for takes longer in order to earn back. So by the time your late 30s early 40, you might be making more money. But you also have the drag of the debt and the payments and the interest that you have to carry with you in the tune of a few hundred thousand dollars extra. Does this differential after tax after lifestyle and family and house does it make up the difference? Now you might think, wow, then I should not go to college. Well, the odds are against you in terms of earning income. Let's dive in. You have a 7.3% chance of making more than somebody with a batch of degree if you don't graduate high school. The odds aren't in your favor. Not to say that you choose investing in yourself, trying to get educated. You're not that 7.3% because you very well might be. But statistically, you've got a one in 12 shot of just beating someone who went to college. Now, if you do graduate, you double your likelihood of beating that person. You go to one in six. If you get some college, one in four, if you get an associates, one in four ish. Now let's go to masters. You have a six out of 10 shot of making more money than somebody who just has a bachelor's. If you get a doctoral seven out of 10 and then finally a professional 83% or eight out of 10 shot of actually making more money. When you do have more skills, you do make more money. The question still remains is it worth it. But in my mind, this is a clear argument for more formal education. One point college. All the while you're thinking through this decision, you need to use Warren Buffett's investment question, which is the difference between what you pay and what you get. So if someone says, "Hey, I want to give you this Ferrari." You might think, "Well, obviously, I want to do that." Well, for what price? Now, if they say for $10,000, that's a great deal. If they say for a million dollars, you might be like, "That's a terrible deal." And so it's not about necessarily whether getting more education makes more money or not. It's just, is it worth what it costs? If I said, "Hey, I can get you to make $200,000 a year." You might say, "Of course, I'm in." But if I said, "In order to make that $200,000 a year, you need to pay me $7,000 for the rest of your life." Okay. Well, all of a sudden, the amount of making is significantly less than that. And so you can't take how much you make without considering how much it costs. I think an important point to make here is that these are percentages, but it also shows that 27% of people who have a doctoral degree still don't make more than people with a bachelor's degree. All that to say, these aren't guarantees the way that they are purported to be. And a lot of college money goes into advertising that this is the guaranteed way of moving forward in life. But looking at these stats, if you're that one of those five people or one of those three people that's below, you literally got none of the upside and all of the downside. So why is there such a disparity between these earning levels? Well, it also depends what industry you want to get into. So for example, if you want to get into personal services, blue collar, health support, sales and office, the higher education doesn't make nearly as much of a difference. On the flip side, if you want to get into science technology, you want to get into health professionals, so we're talking doctors, managerial and professional, then it does make a bigger difference. And so part of making this decision is, well, what do I want to do when I grow up? So if you think that you want to go into a very formal career path, you want to be an account, you want to be a lawyer, you want to be a doctor, then it might make a lot more sense for you. But if you want to be a salesperson, you want to be a marketer, you want to do any blue collar job, any kind of home services, things like that, then it probably doesn't make sense for you. And so in my mind, that's one point for both sides. So one of the questions I would be asking you is, okay, well, if one out of eight people who has a high school degree can be somebody who has a college degree over their median earnings, then I'd be like, what makes that one person special? We actually pulled up a great research study that looked at that exact question, which is how many of these people would have been successful who went to college already on their own without going to college? One of the big skews of colleges that people who go to college in general have more money, come from higher socioeconomic families, etc. Well, if those people had just gone out on their own and gone into the professional world, would they have just made the same amount of money? The results might interest you. If you were a white person or an Asian person, you have no value ad from college. If you control for SAT score, socioeconomic status and other factors that would differentiate people. On the flip side, if you are Latino or you are black, college does have a significant 30 to 40% increase in median earnings. The results like life are a little bit nuanced. It depends on who you are. Now, I could make an argument or you might say, "Hey, Alex was going to win either way." But what some of you guys don't know is I went to Vanderbilt and I graduated Magna Cum Laude. That being said, everything that I do in my life today, I didn't learn in college. And so the question is, was it worth the money? The other question is, if I started four years earlier, would I be further than I am today? So, one of the most interesting statistics I've come across is that there is one metric above all others that predicts your earning income better than anything. You want to know what it is? It's not your race, it's not your gender, not your IQ. Think how crazy that is. It's not even your IQ. It's the zip code you were born in. My theory on the reason of why that is and the differential between races is that when you go to college, you can figuratively change your zip code because you change your environment and the people you know and more importantly, the people you compare yourself to. Poor people can feel rich if they compare themselves to other poor people. But as soon as you get into a room where everyone makes 10 times more money than you, all of a sudden, you feel like the poor person and what do you do? You change your behavior. College may add value to people who didn't already get that value given to them. Interesting, which makes a strong argument for being the first person in your family to go to college because then it actually changes the trajectory of your offspring and your prodigy and your family tree. If you're not the first person, it makes a lot less of a difference. And so the thing that gets a lot of people to win at college is the same thing that gets you to win at business and life. And so the question is, is the college really necessary if you have those characteristics already in order to get in? Like if you got a high enough SAT score to get into an Ivy League school like Harvard, Stanford, Yale, then you probably are smart enough to do the other things without going to Harvard, Stanford, Yale and still make money. As a side note, personally, I got a bug Harvard's GMAT school or for business school. I haven't gone to Harvard Business School, but I've done pretty good in business, kind of interesting. If I were to go to Harvard Business School and then make money afterwards, was it Harvard or was it May? And I actually faced this decision when I was thinking about going to Harvard and I thought to myself, well, do I want to not make money for two years and incur $250,000 of debt? And when I did the dollars and cents for me going to business school, I thought, man, why don't I take the $250,000 and just start a business and I'll bet that by the end of those two years, I'll have learned more than I did in business school and I'll graduate the game of life two years ahead and making more than the median income of somebody who went to business school. And that ended up being true. And so if you want to get into anything that doesn't have a formal degree required in order to make that money, then it doesn't make sense. And that's one point for the career. So one of the big things that pro college advocates talk about is the network that you meet when you're in college and how much that alumni network can benefit for you, getting a job, doing a deal or whatever it may be in the future. And I will put two strong caveats on that claim. Number one is, do I think that for $50,000 a year, I could buy into whatever network I want to be if people making significantly more money than me with skills that I'd like to learn for $50,000 every single year for four straight years. To me, that answer is moot or even more in favor of just going the career. And if you want to buy a network, then buy a network. To me, that's an argument for not going to college if we're trying to control for the same money. Now one of the other points that's pro college that is often made is what about the social experiences you have? The once in a lifetime opportunity to be around all people only your age, potentially meet the love of your life, party, have lots of fun, get dressed up in Togas, learn how to beer, bong and all of that stuff. For $50,000 a year, $1,000 a week, you could party your absolute face off and make friends with all of these people in that same period of time. Now I would say though, it is more difficult to meet that many people your age in a professional career than it is to do it at college. And I would say that if you're looking purely from a fund basis, I'm not going to say real world's going to be college. Now can you get close with $1,000 a week? You go to Vegas, they'll show you hell of a time. But I would still argue that from a social perspective, those four years would be more fun. The question is what you're optimizing for. Now if you want to say I just want to go to a resort for four years, I totally understand, but understand that that's what you're choosing to buy. But if that is what you want, then I would say that the social aspect is a pro for college. Real quick guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have are you guys that you help me spread the words we can not more entrepreneurs, make more money, feed their families, make better products and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I have to do is you can just leave review, take 10 seconds or one type of the thumb, it means the absolute world to me and more importantly, it may change the world for someone else. Now one of the things worse discussing is can you get the upside for free? Now if you have FASTA and you qualify for it, meaning you can get financial aid or you can get grants or you can get a merit-based scholarship for sports or for scholarship, that makes a real difference because now you're getting all the upside without having the downside. If you can go to college for a bargain, that might be a great deal. And that would be one point for college. I do think that there are some full price colleges that even if you had to take loans, it would make sense to go to. If you get into Harvard or you get into Princeton or you get into Stanford or Yale or one of the Ivy League schools, a top 20 school in the United States that everyone recognizes the name, I would say that for how much that will impact your personal brand, that is worth it. Because one, every single time you walk to a room, people be like, "Oh yeah, he went to Harvard or he went to Yale." And that will immediately shift their perception of you and the types of jobs and how quickly you can progress in your career. The second factor is that the people who go from those colleges become the ruling class. They rule the world. They go to the highest paying jobs. The people who graduate from those schools, their meeting income, I don't know what it is, but many of them are in the tens to 20s to 50s of millions of dollars per year. And so in those instances, if you can get in there, then the arbitrage of what you pay versus what you get is still a great deal. Now let's look at the lifetime earnings a little bit more nuanced. Because this is across all degrees in all schools, but I think we can both agree that all degrees are not created equal. If somebody says, "Hey, I have a PhD from State U," versus "I have a PhD from Harvard," you can probably bet that that Harvard PhD is going to be going to top firms, move faster, and ultimately just make more money over the long-term. They can also network with other Harvard PhDs who get into those great places, whereas that might not be as prevalent. And so the 75th percentile at Harvard for a bachelor's degree might be not 3 million, but it might be 6 or 10 or 15 million. And so in that instance, it does make sense. And as much as you're like, "Man, this is a more complex decision." Yeah. Many variables exist, and many variables must be studied. Welcome to the real world. Because the ruling class are so scrutinized for having advantages, there are such generous endowments for those Ivy League schools that most people who don't come from the ruling class can get significant financial aid for going there, making the trade even more worth it. So I'm looking down at my life four years in the future, and I see college, and I see career me. Which one do I choose? So if I started going down the college path, if I come from a wealthier family, then I don't get the benefits of college, and I incur the debt. So that might not make sense. On the flip side, if I am less fortunate, or coming from a less fortunate family socioeconomically, then I do get a better benefit from college, and I will likely get some sort of financial aid, increasing the differences between what I pay and what I get. And I have a new network, so my zip code improves. That might make a lot of sense for me. If I'm super well off, then I already have the benefits of going to college, and I might as well start my career with those benefits already, not incur debt, and make four years more income, and before years further, my career path provided. I don't want to do science technology, doctor, lawyer, accountant stuff. If I'm lower socioeconomic status, then I might not have the same benefit, and I might find myself in the bottom part of that circle that represents the statistics. Not to say that you're not the one of eight people who can earn more, is just less likely. So given those variables, where do we go from here? If I came from a lower educated, lower socioeconomic family and get financial aid significantly, I would say 50% or more of that tuition, I would say go to college. You pay less for what you get, and you get more than anyone else does on the flip side. And this is counterintuitive. If you already come from a highly educated family, and you have higher socioeconomic status, and you're not going to get favorable financial terms for paying for school, it makes less sense for you to go. The counterintuitive thing here is that the rich families, the better off families, are the ones that encourage their kids. kids to go to college the most. I don't even say they encourage them, they expect it. They demand it. It's assumed. It's the default choice. This box is already checked for them at birth. If you get no benefit from college and it costs you money and four years of otherwise career development, then you shouldn't do it. The big caveat off the top is if you want to go into one of those careers that requires a degree, it requires a degree. It is what it is. But I will say this. If you don't have a plan for what you want to do with your life, don't expect that $200,000 in four years is somehow going to give you a plan. You just need to confront the fact that right when you graduate, you're still going to be looking at life with all the directions coming from your feet and being like, "Well, what should I do now?" Because I can promise you, even if you fell in love with a class, there's no career path that's the class. And so it doesn't even mean anything to get good at that. And so once you get into the real world, you're like, "Well, I love biology. Unless you're going to be a scientist or you're going to be a physician, you're probably going to go into HR. It makes way more sense to actually learn what the departments of a business are and what those roles entail on a day-to-day basis and think, "Well, these are the types of things I like. If I like talking to people, I could be a recruiter for a company. If I like talking to people, I could be in sales." As somebody who employs almost 1,000 people now between our portfolio companies, we don't care at all what someone's degree is. You know what we do care about? Experience. So if I had a four-year college graduate who comes out with a philosophy degree, and I've got somebody who's been in sales for four years and didn't have a degree in the same age, who do you think I'm picking for the sales job? Now if you're not going to college and you've made that decision, let's talk about how to actually maximize that path. Number one is that you are still prioritizing education. You're just not prioritizing formal education. So you should absolutely take money, take time, and spend the majority of your day trying to learn. If you play video games all day and you just watch Netflix and you smoke weed in your parents' basement, you're going to be the 7 out of 8 who lose. But if you are the type of person who can work all day and work on themselves and get experience in the real world, then you can learn at your job all day, get paid to learn, take that money, spend it on learning more in the evenings, and four years from now, you will be so much better equipped than anybody who has graduated four years in a formal degree who just knows how to shock and be a really fast. I will tell you how I've learned everything outside of school. I pay people who already have the skill by the hour to learn. Now if I can't afford them, I will see if I can buy a course or a book or watch their videos or whatever it is. But if they don't have any of that stuff and you're just saying, "Man, I really want to learn how to do storage units from this guy." Well, then you can ask to pay for one hour a week to learn what to do. You can ask back and promise you entrepreneurs and people who have skills are always happy to help people who take initiative. There's nothing that fills someone's heart more, speaking from personal experience, of someone who asks you for advice and then executes on it. And as long as you do that, you will have more help than you know what to do with. Start one or two steps ahead of where you're at, pay to learn the skills and then take one or two steps. Whether you're taking this path or you're taking this path, you have to choose to invest in your ability to learn so that you can earn in the future more than you are. Everything that you make in the first four years of your career is not what you're trying to get rich on. It's what you're trying to get smart on. And the fact that you get paid for it is just bonus. So don't get your ego caught up in the fact that you're making $30,000 a year, $40,000 a year or minimum wage. I started a minimum wage after having a white collar job for two years and getting above Harvard's Minskore. And so you have to take a slice of humble pie to realize that I might have been really good as a management consultant, but I had no shit about running a gym. And so not coming in pretending like you know something that you don't and being willing to accept the fact that someone who might be less educated or less polished than you still knows more. Now if you get into the Ivy League school, then by all means, like I said, go. But if you don't get into one of those schools and you're just into the middle of the pack that costs too much and doesn't give you anything extra, then I think that you need to pull up to the table, put the napkin in your collar and take a slice of humble pie and realize that you don't know everything and you have to be willing to suck and you also have to be willing to be doubted by your family because they probably won't agree with this decision because they're going to think, well, this worked for me. My life is great and I want the same for you. But remember, they're doing this out of love for you because they want you to win. You just have to explain to them, I want me to win too. And I think times have changed. When they came out hierarchy and tenure mattered a ton and pedigree. Whereas today, because everyone has equal access to information for free on the internet and you can learn more on YouTube than you can for most colleges, you don't need what once was required. So big picture, you don't need to stress. You're going to win either way if you're a winner. This will probably just get you there faster with less debt. On the flip side, if you are born in a bad zip code, you have a family that the majority of them has not gone to school or any kind of formal education and you don't saddle your family or yourself with debt in order to go to school, it almost always makes sense to go to school. Because all you're doing is you're getting a different network of people, you will then change the trajectory of your progeny, your family tree that comes after you. And all you do is you start four years later. And again, you have all the earning potential benefits of going and getting a bachelor's degree, but without all the costs. And you got a real value at from college where somebody who started with an advantage doesn't. And so in that sense, it absolutely does make sense to do that. I'm going to as many credits as I can and I'm doing that so I can meet as many people as humanly possible. All right. So that's where you sign for the social clubs, sign for the sororities and fraternities, go to all the things that you can. Your luck surface area will increase with the amount of people that you expose yourself to. And we'll also introduce you to a lot of diversity of opinion. And if you're going to college because we want to change your environment and change what you compare yourself to, then the best thing to do is get exposed to a lot of different things. And if you find yourself in a position where you have a hard time not partying as much, not to say that you can't party, have fun. But if you're slacking at school, you're paying to go to school. It is your job to learn. And you need to treat it like that. You're paying, not even getting paid. You're paying $1,000 a week to get educated. And you're going to have to make up that $1,000 later on with interest. And so you better fucking learn something while you're there. And so the idea of the fifth year senior and taking 12 credits a semester, the bare minimum required to be a full-time student, what a joke. Take 18, take 21 credits, and do it in four years. You can graduate with a double degree. I just graduated in three. I cut a year off. Right? If you can go to summer school, you can also save money. And you can still get the same benefits. And so you can graduate in two years or three years if you absolutely hustle your ass off. Because you are a professional student, act like one. The TLDR is, in either of these paths, you are choosing to learn, not earn. The money goes in different directions, but that is the objective. And in both of these career paths, objective number one is being a professional. And you're either being a professional student or you're being a professional student that just happens to get paid for it. But in either situation, learning comes above everything else. The side benefits are that you'll meet a few more people in your party a little harder. The side benefits here that you're not going to go in debt and you're going to get paid to do it. I want you to know that I am more impartial than probably anyone else in your life. And I say that because I don't know you and I don't know anyone else in your life. Now they will get status based on their friend group who are older and might not understand stuff like this. And so they want you to do that because one, it probably comes from a good place. But two, because they're afraid of their downside of what if you become a failure. But by the way, you can become a failure if you go to college too. So the one thing that you can do to guarantee this is that you have to decide for yourself. Number one, and number two is that either of these paths is education. And you have to understand that you're not getting into the workforce to go make money. You're getting into the workforce to learn better, more relevant skills and just happen to get paid for it. As long as you keep that clear and that you're going to stay disciplined about it because you're not going to be more necessarily disciplined when there's tons of naked girls and parties around you. And some of you are like, I'm sold on college by that alone. I get it. And by promise, there's plenty of time for buff. Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Lail and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. You've got marketing, you've got sales, you've got product, you got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerged at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. 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