Name: Why the AI Gold Rush Is Causing College Students to Drop Out
Uploaded: 2023-10-24T16:57:00Z
Duration: 6 min 50 s
Description: Students are leaving college early to launch their own AI startups. WSJ reporter Lindsay Ellis joins host J.R. Whalen to discuss why they feel now is the best time to start an AI business, and the risks some face. Photo: Andri Tambunan For The Wall Street Journal

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Students are leaving college early to launch their own AI startups. WSJ reporter Lindsay Ellis joins host J.R. Whalen to discuss why they feel now is the best time to start an AI business, and the risks some face. Photo: Andri Tambunan For The Wall Street Journal

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Why the AI Gold Rush Is Causing College Students to Drop Out

J.R.: Here's "Your Money Briefing" for Tuesday, October 24th. I'm J.R. Whalen for The Wall Street Journal. Some students are dropping out of college to create their own AI startups. Wall Street Journal reporter Lindsay Ellis joins me. So, Lindsay, what is it about the AI market that's causing some people to leave college?

Lindsay: First and foremost, there's a lot of money. A lot of investors are trying to back good ideas connected to artificial intelligence. So there are a lot of opportunities that young entrepreneurs see to potentially take advantage of, and the last year has been huge to spark interest in generative AI. Last fall toward the end of 2022, there was a huge influx of interest in the technology thanks to ChatGPT's release and millions of people in their homes could see that generative AI could write computer code or write almost like a human could. And so that interest is also fueling students' interest here.

J.R.: This sounds familiar. Did we see something like this in the past?

Lindsay: So there have been waves of dropouts to go into tech in the past. I mean, the dot-com boom, when social media was really taking off. I mean, we all know the household names: Mark Zuckerberg, Bill Gates, Steve Jobs. All of these guys are extremely high-profile, college dropouts with billion dollar ideas. Not every dropout, of course, very few of them will get to that level, but there have definitely been key cases that sort of perk up students' minds to maybe this is a path that I'll go down.

J.R.: You recently spoke to several people who've gone down this road. Why did they choose to step away from college now? Why not do some AI work but also get a degree and have that on their resume?

Lindsay: So there are a couple of different factors then. Many entrepreneurs told me that the trigger point for them was when they got that key investment or when they got into a startup accelerator. That made the decision quite easy. There was also a factor of timeliness too. They are keenly aware of the potential for this technology to automate some jobs or portions of some jobs. And so quite a few people told me, "I would rather not have my job automated away. I would rather have some agency here."

J.R.: So it's like strike why the iron is hot.

Lindsay: Exactly, I spoke with a man named Jay Dang who withdrew from UC Berkeley earlier this year. He had teamed up with a Berkeley MBA student, Lifan Wang, to launch something called FlowGPT, and FlowGPT is basically an online library of applications that use generative AI, in some ways can replace human work. It can write marketing materials or edit your resume or cover letter. Jay, before he made the decision, he sort of asked around to other people he knew who had dropped out and started a business to basically say, "Is this the right call?" But he did pull the trigger. He left during his sophomore year and now he says, "This is the best decision that I've ever made." His company now employs eight full-time workers, has millions of users, he says, each month. And, to him, this bet really paid off.

J.R.: What are these students up against? What kind of an effort goes into building a successful AI startup?

Lindsay: Many investors told me that to succeed in entrepreneurship connected to AI, you really need to have a lot of very good data, that that is the difference maker between a lot of different companies. And so that advantages incumbents in a lot of ways, that if existing companies have their own customer data or access to it, they might have the edge over something that is new from a college student without that access.

J.R.: But in terms of being on campus, wouldn't business or engineering or computer science departments on the campus offer the resources that they need?

Lindsay: You know, many of them actually have tapped into those resources and that's where they met a co-founder or worked in a lab to develop some of those skills. So there are certainly aspects of campus life that have really enabled them to get this far.

J.R.: What are more experienced people in the AI industry saying about younger people wanting to leave school and jump into the business?

Lindsay: I've heard a few different answers to this here. To some degree, investors are skeptical that every AI startup or venture is world changing, and some are expecting a shakeout of sorts in the market in which money will continue to go to those that have the chops and maybe wouldn't toward people who are saying they have an AI company but really just trying to capture that kind of buzz. I also heard from a number of professors that it is really natural that many of these ambitious young people are trying to make a move here. I mean, that type of optimism, that type of experimentation, younger people can be more willing to follow those leads especially if they don't have kids or a mortgage and have to worry about sort of regular monthly expenses the way some of us older people do.

J.R.: What are the schools doing about this? Is there any effort to encourage these entrepreneurs to not leave?

Lindsay: Well, so schools say there's so much to learn on campus; it will prepare you for a lifetime of opportunities and not this one next opportunity. Schools say that they see their role as to educate and not incubate, and they stress that if you've learned this much in a couple of classes and by yourself, think how much farther your knowledge will go if you finish a degree program and really understand more aspects of this technology.

J.R.: That's Wall Street Journal reporter Lindsay Ellis and that's it for "Your Money Briefing." We'll be back tomorrow morning with WSJ's Jesse Newman with ways to reduce your food bill at the supermarket and at restaurants. This episode was produced by Ariana Aspuru with supervising producer Melanie Roy. I'm J.R. Whalen for The Wall Street Journal. Thanks for listening.

WSJ's Your Money Briefing podcast is your personal-finance and career checklist. Finance reporters and experts break down complicated money questions every weekday to help you make better decisions about managing your money. 

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