Forget the Ivy League: Most valley CEOs went public

College Search & Selection
1

<p>According to an article in today's San Jose Mercury News with the title above:</p>

<p>"Two-thirds of the CEOs of the [Silicon] valley's 150 largest public companies who earned their undergraduate degrees in the United States attended taxpayer-funded public universities, state colleges and regional schools, according to a Mercury News survey. About one out of six studied overseas." </p>

<p>And two college dropouts - Larry Ellison of Oracle and Steve Jobs of Apple - also made the list.</p>

<p>Find the complete article here:
<a href="http://www.mercurynews.com/ci_7578047?nclick_check=1%5B/url%5D"&gt;http://www.mercurynews.com/ci_7578047?nclick_check=1&lt;/a&gt;&lt;/p>

<p>Other findings:</p>

<p>"Tech vs. non-tech: About half the degrees focused on some form of engineering or computer science degree - and nearly one-third were in electrical engineering. That said, non-technical specialties such as business, finance, accounting and marketing accounted for about one-fourth of the degrees."</p>

<p>"One degree isn't enough: The CEOs amassed 266 degrees - an indication that these eventual CEOs frequently felt an undergraduate degree was inadequate preparation"</p>

<p>"Worldwide magnetism: Twenty-five executives earned degrees abroad from 12 countries. Israel, India and the United Kingdom were the top exporters of executive talent, with four apiece."</p>

<p>Also, from some of the sideline stories not in the main article:</p>

<p>"The Pac-10 is the dominant athletic conference among valley CEOs, with at least 22 undergraduate degrees, while the Big-10 is a distant second with 13."</p>

<p>"Only 1 of the CEOs has three degrees."</p>

<p>"The 116 CEOs who earned their undergraduate degrees in the United States chose taxpayer-funded public universities over private colleges by a 2:1 ratio."</p>

<p>Some top schools in terms of how many CEOs received degrees there:
Stanford - 17
UC Berkeley - 13
MIT - 8
Harvard - 7
UC Davis - 6
Princeton - 5
Oregon State - 5
Arizona State - 4
UCLA - 4
Carnegie Mellon - 4
San Jose State - 4
Wisconsin - 4
Illinois - 4</p>

<p>Only 145 CEOs (out of 250 possible) were included in the survey "because some companies do not post such information and didn't respond to queries."</p>

<p>In my view, the reason for the prepondence of Bay Area and Pacific Coast schools is largely based upon geography--as well as their academic prowess--but it still points out that degrees from public and lesser-known (non-Ivy) schools can still lead to the executive office.</p>

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<p>the requirement for being a ceo is to drop out of college :D</p>

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<p>Lets compare the private vs public school ratio to the private school vs public school ceo ratio; then we talk</p>

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<p>Years ago the privates had a much higher percentage of CEO jobs. It has dropped in half over the last 20 years.</p>

5

<p>Well, the problem with the analysis is that we are presuming that we are presuming that CEO's are still the most desired jobs in the country.</p>

<p>Yet the truth is, as pointed out by Rakesh Khurana and other researchers, many of the best students don't want to be CEO's. Instead, they want to be general partners or principals at private equity firms, hedge funds, management consultants, and so forth. To paraphrase Khurana, students are wondering why they should want to be the CEO when they can instead be the guy who TELLS the CEO what to do (and who makes more money than the CEO).</p>

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<p>everyone knows the CFO is the real leader of the company. duhhhh. :D</p>

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<p>How's that Hedge fund thing working now? Many have lost small fortunes and the some of the rest are on thin ice. Telling people what to do when you don't really have a clue only works in a rising market/economy. We'll see how they do with leverage working against them and sales/income falling.</p>

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<p>
[quote]
How's that Hedge fund thing working now? Many have lost small fortunes and the some of the rest are on thin ice.

[/quote]
</p>

<p>Uh, it's actually worked out very very well. I believe the latest WSJ reports indicate that hedge funds have lately lost only a tiny smidgen of their value, which is amazing considering the latest market turmoil and downturn (but then again, they are supposed to be hedge*funds, so they are supposed to be hedged against these sorts of gyrations). It is actually the *integrated banks that have really taken it on the chin, not the hedge funds. </p>

<p>But your question misses the point. The question is not whether the hedge funds themselves * do well. It's whether the *employees of the hedge funds do well. The truth is, and somewhat sadly, hedge fund employees can do very well for themselves even when the funds themselves don't do so well. Keep in mind that hedge funds do not invest their employees' own money. Their investment capital comes from their limited partners. Most of them have guaranteed management fees of around 2% of their investment base, and they make that money regardless of whether the fund generates money or not. So when the hedge funds lose money, the employees are still lapping up the management fees. The LP's are the ones who lose.</p>

<p>Personally, I think this is a serious inefficiency in financial markets. VCPE has the same inefficiency. Most VCPE firms do not generate above-market returns, yet VCPE employees get paid very well anyway. But hey, nobody asked me. Whatever I think about it doesn't really matter. At the end of the day, for whatever reason, investors seem to (often times stupidly) think that these investment vehicles are good ideas.</p>

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<p>
[quote]
But your question misses the point. The question is not whether the hedge funds themselves do well. It's whether the employees of the hedge funds do well. The truth is, and somewhat sadly, hedge fund employees can do very well for themselves even when the funds themselves don't do so well. Keep in mind that hedge funds do not invest their employees' own money. Their investment capital comes from their limited partners. Most of them have guaranteed management fees of around 2% of their investment base, and they make that money regardless of whether the fund generates money or not. So when the hedge funds lose money, the employees are still lapping up the management fees. The LP's are the ones who lose.

[/quote]
</p>

<p>This is absolutely correct. In a normal industry (esp. in, say, investment banking) if your performance is below par, you risk getting fired. In the hedge fund industry if your fund underperforms, you still get paid and at worst, a hedge fund manager closes up shop, returns the invested capital back and lives to launch another fund. </p>

<p>The management fees alone keep the employees very well paid regardless if they are beating the market.</p>

<p>
[quote]
Personally, I think this is a serious inefficiency in financial markets. VCPE has the same inefficiency. Most VCPE firms do not generate above-market returns, yet VCPE employees get paid very well anyway. But hey, nobody asked me. Whatever I think about it doesn't really matter. At the end of the day, for whatever reason, investors seem to (often times stupidly) think that these investment vehicles are good ideas.

[/quote]
</p>

<p>Investors understand that for every Google there are going to be 10, 20, 50, 100 busts. That's why this is a game for guys with deep pockets. You have to be able to ride the wave of misses in order cash in on the big hit. It is feast or famine in many ways but once you hit it big, you eat for a very long time indeed -- the fact is most people can't afford to have that much capital tied up for so long... frankly, most people can't even afford that kind of investment.</p>

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<p>
[quote]
Investors understand that for every Google there are going to be 10, 20, 50, 100 busts. That's why this is a game for guys with deep pockets. You have to be able to ride the wave of misses in order cash in on the big hit. It is feast or famine in many ways but once you hit it big, you eat for a very long time indeed -- the fact is most people can't afford to have that much capital tied up for so long... frankly, most people can't even afford that kind of investment.

[/quote]
</p>

<p>Yeah, but that's not a justification for the current compensation structure of VCPE. I have no problem whatsoever with employees of VCPE firms who get paid extremely well because their firms do indeed generate above-market returns. What I don't understand is how is it that employees of VCPE firms that don't do well can nevertheless get paid well anyway. What's up with that? That shouldn't happen. But, sadly, it does. </p>

<p>What I think should happen is that VCPE firms should be forced by their LP's to lower their management fees, ideally to 0%, or at least to some bare-bones amount (i.e. enough to run the office and pay some nominal salaries, but that's it). Basically, I believe that if the LP's don't receive above-market returns, then the VCPE employees should not get paid, and that's exactly the way it ought to be. </p>

<p>But, sadly, that is not the way it is. Hence, I have to unfortunately agree that as long as these firms are basically paying out 'easy money', then people should take advantage. Why work hard for your money when you don't have to?</p>

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<p>
[quote]
Uh, it's actually worked out very very well. I believe the latest WSJ reports indicate that hedge funds have lately lost only a tiny smidgen of their value, which is amazing considering the latest market turmoil and downturn (but then again, they are supposed to be hedgefunds, so they are supposed to be hedged against these sorts of gyrations).

[/quote]
</p>

<p>I think we can conclude this is questionable right now. Certain macro strategies and emerging market strategies have faired well, but overall, as published today by WSJ, hedge funds are again negative, first time since August. When level 3 assets and the separation between level 2/3 become less fuzzy, the picture will become clearer. And it will allow the hedge funds facing insolvency to break apart due to the tighter brokerage lending standards. And then we can watch how the debt defaults and huge derivatives hedging will effect funds when hedges are called upon and they may or may not be able to be paid. Yes employees are making loads of money, but to say the industry as a whole is doing well would be wrong. The funds shorting the mortgage insurers and credit market with 1000%+ returns are clouding the numbers</p>

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<p>Hedge funds have received a collective black eye lately, but much of the criticism is a knee-jerk reaction to what is going on in the markets, particularly the sub-prime debacle. But hedge funds didn't cause the sub-prime situation -- predatory lenders did. Sure a lot of hedge funds that have significant exposure to the MBS / CDO market will go down, but I think that is a good thing. It will help rationalize a crowded market by cleaning out the weaker funds with no investment discipline. Funds that take huge bets backed by even larger leverage are asking for trouble -- we saw that with LTCM.</p>

<p>Overall, hedgies have helped bring efficiencies to the market because when price dislocations exist (whether an asset is under or overvalued) hedgies have helped close that gap.</p>

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<p>Agreed</p>

<p>10char</p>

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<p>
[quote]
hedge funds are again negative, first time since August.

[/quote]
</p>

<p>Sure, they're negative. Should we really expect otherwise? After all, the entire market has been down lately. </p>

<p>What I am saying is simply that the hedge funds have not experienced anywhere near the level of the integrated banks. Now, you are correct that pain may be coming as market positions wind down and mark-to-model valuations begin to reveal true problems. But since most hedge funds are heavily reliant on the debt markets, which have dried up, you would have expected quite a lot of fallout to have occurred already. That has not happened, at least, not to the level that people were expecting. </p>

<p>
[quote]
Funds that take huge bets backed by even larger leverage are asking for trouble -- we saw that with LTCM.

[/quote]
</p>

<p>Funny you should invoke LTCM, because I think that story actually supports my position. Meriwether, who was the mastermind of the LTCM debacle, is now back running another billion dollar fund! That only illustrates my central point - that in the hedge fund industry, you can fail spectacularly, and yet investors will still pay you anyway.</p>

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<p>Silicon Valley is much more of a meritocracy. Some East Coast employers have yet to fully catch up with that concept. People are so mobile in the tech industry, and small companies come and go so quickly (not to mention projects and divisions of larger ones, that it's hard to coast on a fancy degree - what you have done lately is far more important.</p>

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<p>FT.com</a> / In depth - One hedge fund in 10 to go bust, says Man</p>

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<p>
[quote]
Funny you should invoke LTCM, because I think that story actually supports my position. Meriwether, who was the mastermind of the LTCM debacle, is now back running another billion dollar fund! That only illustrates my central point - that in the hedge fund industry, you can fail spectacularly, and yet investors will still pay you anyway.

[/quote]
</p>

<p>This illustrates my earlier point as well:</p>

<p>
[quote]
In the hedge fund industry if your fund underperforms, you still get paid and at worst, a hedge fund manager closes up shop, returns the invested capital back and lives to launch another fund.

[/quote]
</p>

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<p>Interesting list of schools....I didn't see Yale on that list at all.</p>

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<p>The thing is, all the smarts kids I knew in high school DIDN'T go for business. Most went for pre-professional or other highly competitive fields like engineering, chemistry, and psychology. Obviously, there are smart people who do no go into these specific programs. But, I think there is a very small percentage of top students that actually want to be CEOs, so the number is definitely not a tell-all. Most of my slightly-above average friends went into business at state schools or mediocre privates.</p>

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<p>
[quote]
The thing is, all the smarts kids I knew in high school DIDN'T go for business. Most went for pre-professional or other highly competitive fields like engineering, chemistry, and psychology.

[/quote]
</p>

<p>
[quote]
Most of my slightly-above average friends went into business at state schools or mediocre privates.

[/quote]
</p>

<p>Are you suggesting that business is not highly competitive? Try landing a job at Goldman Sachs, McKinsey, Google, KKR, etc.</p>

<p>Besides, this thread is yet another misguided attempt to discredit the Ivy League. The simple fact of the matter is, 99.99% of college graduates will never become CEO of a company (regardless if they go to an Ivy or a public or never graduate at all) --> so what does that leave you? You should just go to the best school that you can. As always.</p>