Jeff Bezos and More: In Defense of the Value of Valedictorians

Jeff Bezos is one of the most successful valedictorians in American history.
Jeff Bezos is one of the most successful valedictorians in American history.

Source: Steve Jurvetson – Flickr: Bezos’ Iconic Laugh, CC BY 2.0

Jeff Bezos is known as the founder and CEO of Amazon.com (AMZN). The stock for his company is toying with the $1000 level for the first time ever and is close to pushing Bezos past Bill Gates as the world’s richest man.

Amazon.com (AMZN) trades near an all-time high as it flirts with a historic $1000 level.
Amazon.com (AMZN) trades near an all-time high as it flirts with a historic $1000 level.

Source: FreeStockCharts.com

As of May 25, 2017, Bezos had an estimated $82.8B net worth. Bezos also graduated from Miami Palmetto High School as his class’s valedictorian. You would never believe this combination of information after reading headlines like this recent one from CNBC: “This is why class valedictorians don’t become millionaires.”

In this article, CNBC interviewed Eric Barker, author of the recently released book “Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong.” Barker made the following strong claim:

“[Valedictorians] do well…but they don’t actually become billionaires or the people who change the world.”

Given the fame, fortune, and impact of Bezos, I wondered how could Barker make such a strident claim with no qualification and how the claim could be accepted with no critical review (CNBC was far from alone). I decided to do a quick internet search. In the top results, I discovered several sites which list famous, impactful, and even very rich people who were the valedictorians of their respective high school classes. I provide the list, edited by own cross-referencing, at the end of this post. This list is far from comprehensive. Given the readily available information, I have to assume that Barker started with a theory or hypothesis and focused on confirming data. It seems he mainly relied on the work of one researcher from Boston College, Karen Arnold. Again from the CNBC article:

“[Barker’s] assessments are based on research by Karen Arnold, a professor at Boston College and the author of ‘Lives of Promise: What Becomes of High School Valedictorians: A Fourteen-year Study of Achievement and Life Choices.’ She tracked 81 high school valedictorians and salutatorians after graduation…

…’Valedictorians aren’t likely to be the future’s visionaries,’ says Arnold. ‘They typically settle into the system instead of shaking it up.'”

I put aside the technicality that Arnold included salutatorians in her study and not just valedictorians. Instead, I was left unclear about the implicit relationship Barker drew between “billionaire” and “visionary” when Arnold did not appear to do so in her research. As far as I can tell from some references to Arnold’s 1995 book which followed graduates from the class of 1981, Arnold did not create monetary quantifications of success. However, I can definitely understand why someone with a money-based view of success would make the connection. Indeed, the hurdle Barker offers up as a definition of success is extremely high. The CNBC article produced this related quote from Barker’s book:

“There was little debate that high school success predicted college success. Nearly 90 percent are now in professional careers with 40 percent in the highest tier jobs. They are reliable, consistent and well-adjusted, and by all measures the majority have good lives.

But how many of these number-one high school performers go on to change the world, run the world or impress the world?

The answer seems to be clear: zero.”

Zero impact. Nada. Not Jeff Bezos. Not Conan O’Brien. Not Sonia Sotomayor. Not W.E.B. Du Bois. And do not dare include General Douglas MacArthur. (See the end of this post for descriptions of these and other notable high school valedictorians).

Barker’s mistake was not just an over-reliance on a single, very old study. Barker also over-extrapolates and fails to consider the frame of reference for these strong claims that box valedictorians into a corner of inconsequence. (Ironically enough, Bezos seems to have graduated in 1982, one year after Arnold kicked off her study). Arnold’s sample is extremely small; the sample is too small to reliably test for the kinds of rarefied achievers that Barker highlights.

First of all, there are currently at least 22,000 high schools in the U.S. My estimate comes from the number of high schools referenced by the rankings of the U.S. News and World Report. So the U.S. presumably produces at least 22,000 valedictorians a year. For the sake of argument, I will reduce that number to 20,000 valedictorians in 1981. Arnold’s research subjects are 0.4% of the population for a given year and with each passing year, the numbers of valedictorians quickly overwhelm her longitudinal snapshot. If Arnold’s research were a survey, her results would include a whopping (minimum) margin of error of 11% for the class of 1981 assuming her sample was randomly selected (without bias). In other words, if the conclusion from this one study is that 0% of valedictorians grow up to be “world changers”, we could assume that repeating this study multiple times would generate observations of roughly as many as 11% (or 9) valedictorians of consequence in each trial.

Quantifying “world changing” is not easy, so it makes sense that Barker used the short-hand of billionaires. Yet, billionaires are like needles in a haystack. There are so few billionaires that in 2016, Forbes was easily able to list all 540 of them…and this is across DECADES of high school classes, not just one. I would love for someone to categorize this list by academic achievements and class years. Anyway, according to the Census Bureau estimate for 2016, the adult population of the U.S. was about 249,485,228. So the rate of billionaires in the adult population in general is 0.0002%. Using a sample size calculator, I find that I need 1,920,726 adults to conclude that my study group produces zero billionaires with 95% confidence.

The hurdle for millionaires matches Arnold’s sample. CNBC reported earlier this year that there are 10.8M millionaires in the U.S. That amount produces an incidence rate of 4.3% in the adult population (for the sake of simplicity, I am assuming all these millionaires are adults). The sample size calculator produces a study group size of 85. Yet, the only mentions of millionaires in the CNBC article are in the title and in a reference to a different study. I quote Barker’s use of this study from an article Barker wrote in Time’s Money to promote the book with the hyperbolic title “Wondering What Happened to Your Class Valedictorian? Not Much, Research Shows“:

“School has clear rules. Life often doesn’t. When there’s no clear path to follow, academic high achievers break down. Shawn Achor’s research at Harvard shows that college grades aren’t any more predictive of subsequent life success than rolling dice. A study of over seven hundred American millionaires showed their average college GPA was 2.9.”

Barker again produced surprisingly strong conclusions based on a single result. Yet, this single result, a GPA of 2.9, is actually pretty good: just a small fraction below a B grade. Assuming that 2.0, a C grade, is average, this study showed that millionaires are above average academic achievers in college (putting aside grade inflation!), hardly a roll of the dice. I am willing to bet that the top academicians are partially responsible for pushing that study’s results above a 2.0 average.

A quick internet search helped me turn up another study of millionaires and their academic achievement. In 2016, Bloomberg reported on the work of economists at the Federal Reserve Bank of St. Louis who used data from the Federal Reserve’s Survey of Consumer Finances for 2010 and 2013:

“According to the sample, a black person’s odds of being a millionaire increase from less than 1 percent if he or she doesn’t complete high school to 6.7 percent with a graduate degree. White Americans without a high school diploma start out with slightly better chances—1.7 percent—that rapidly improve with more school: A graduate-level education increases their probability of amassing a net worth greater than $1 million to 37 percent.”

These differences are significant. Since it typically takes above average academic performance to get admitted to graduate school, THESE results seem to suggest that academic performance in college does matter in one’s drive to millionaire status. However, academics are obviously not the ONLY path to success.

The fact that there are multiple paths to success and riches tripped up “Rich Dad Poor Dad” author Robert Kiyosaki when he leveraged Arnold’s results to come to even stronger conclusions about success than Barker did. Back in 2013, Kiyosaki really slammed valedictorians when he wrote “Why Valedictorians Fail“:

“Professor Arnold discovered that, ‘while these students had the attributes to ensure school success, these characteristics did not necessarily translate into real-world success…. To know that a person is a valedictorian is only to know that he or she is exceedingly good at achievement as measured by grades. It tells you nothing about how they react to the vicissitudes of life.’

Translation: real life is not measured by grades but by your bank statement—and they don’t teach that in school.”

Kiyosaki has an even clearer money-based definition of success than Barker; if you are not rich, you have failed in life. Kiyosaki also slams valedictorians for being too timid: “Valedictorians don’t make good entrepreneurs and investors because they’re afraid of risk. They make great employees.” Poor Bezos!

Kiyosaki’s effort to portray valedictorians as failures buries the valuable message of resilience, boldness, and adaptability.

“The message is simple: Success in the classroom does not ensure success in the real world. The world of the future belongs to those who can embrace change, see the future and anticipate its needs, and respond to new opportunities and challenges with creativity and agility and passion.”

I would respond that academic success also does not exclude you from being the kind of wealthy success that Kiyosaki elevates. The list of valedictorians at the end of this post validate my claim.

After all this belittling of academic brilliance, I found humorous irony in a piece that featured Arnold defending the distinction of valedictorian as a way to honor academic achievement (emphasis mine):

“…being valedictorian is the one academic honor that does matter to students. We understand that athletes and performers merit special honors because their achievements represent hard work, focus, and motivation. So why shy away from awarding honors to students who succeed in academics?

…In 1995, I co-authored a book on what becomes of valedictorians later in life. We studied 17 years of data and determined that valedictorians become hardworking, productive adults whose educational and career achievements remain outstanding.”

Arnold is clearly not one to devalue valedictorians in the ways that Barker and Kiyosaki do. I daresay that Arnold’s main point was to build character profiles of top academic achievers and not to establish a hard and fixed ceiling of life achievement for these people. I further claim that using research in isolation, without considering a full context of data and analysis, and/or failing to review multiple possibilities leaves us vulnerable to confirmation bias and weakens our ability to lean against counter-arguments.

So overall, I say “GO!” to all of you star academicians who wish to walk in the footsteps of Bezos and so many other extremely successful people!

A LIST OF FAMOUS HIGH SCHOOL VALEDICTORIANS – a healthy mix of successful, impactful, non-conformist, and even wealthy academic achievers

(List compiled from ranker.com and Newsday with cross-checking from Wikipedia and Biography.com. High school names and graduation years were not available for all personalities.)

  • Jeff Bezos: founder, CEO, and Chairman of Amazon.com – Miami Palmetto High School, 1982 (?).
  • Douglas MacArthur – general known for World War II battles: West Texas Military Academy.
  • W.E.B. Du Bois – sociologist, historian, civil rights activist, Pan-Africanist, author, writer and editor, first African-American to earn a Ph.D. from Harvard: “an all-White high school in Massachusetts” late 19th century.
  • Sonia Sotomayor – U.S. Supreme Court Justice: Cardinal Spellman High School in the Bronx, 1972.
  • Coretta Scott King – civil rights activist (wife of civil rights leader Martin Luther King, Jr.): Lincoln Normal School, 1945.
  • Conan O’Brien – comedian, last night talk show host: Brookline High School, 1981.
  • Weird Al Yankovic – music artist specializing in parodies: Lynwood High School.
  • Kevin Spacey – actor: Chatsworth High School in Chatsworth, California, 1977 (co-valedictorian).
  • Mare Winningham – actress: Chatsworth High School in Chatsworth, California, 1977 (co-valedictorian).
  • Cole Porter – music composer: Worcester Academy in Massachusetts, early 20th century.
  • Jodie Foster – actress: the Lycée Français de Los Angeles, a French-language prep school, 1980.
  • David Duchovny – actor (made famous by the X-Files): the Collegiate School in Manhattan.
  • Chevy Chase – comedian, actor: Stockbridge School.
  • Cindy Crawford – model: DeKalb High School, 1984.
  • Bette Midler – actress, singer: Radford High School.
  • Alicia Keys – singer: Professional Performing Arts School.
  • Johnny Bench – major league baseball player: Binger-Oney High School in Binger, Oklahoma
  • Tiffani Thiessen – actress: Valley Professional High School in Studio City, Los Angeles, 1992.
  • Emmylou Harris – singer and musician: Gar-Field Senior High School.
  • Harry Anderson – actor: Buena Park High School then North Hollywood High School, 1970.
  • William Peter Blatty – author (wrote the Exorcist): Brooklyn Preparatory, a Jesuit school, 1946.
  • Troian Bellisario – actress: Campbell Hall School in North Hollywood, California.

{Addendum: title changed and small corrections made on June 5, 2017}

Amazon’s e-Book Pricing Problem

I intended to write a detailed examination of Amazon’s pricing problem with e-books. However after doing just a little research, I found there are plenty of people who have already provided excellent opinions and recommendations. So, instead of providing my classic unsolicited advice, I am posting links to the two most insightful pieces I found in addition to a general news story if you just want an overview on current events.

General news
ChannelWeb: “Amazon Gives In To Publisher’s Demands For Higher E-Book Prices”
BusinessWeek: “Amazon’s E-Book Price Reversal: A Mixed Blessing” – considers the impact of pricing on demand for e-readers and e-books.

Opinion
The Big Money (Marion Maneker): “Amazon’s Self-Defeating War on Publishers”
Tobias Buckell: “Why my books are no longer for sale via Amazon”

Maneker recognizes that sales of e-books will inevitably dominate sales of physical books and recommends the following:

“There is…a compromise that might benefit all parties. Amazon has been pushing the Kindle to heavy users of frontlist books. But the agency terms offer an opportunity for backlist books that gives everybody a win. With the agency model, a backlist book becomes a goldmine for publishers, authors, Amazon and Apple. Priced at $9.99, the publisher receives pretty much the same amount of money under agency terms as it would have for the wholesale book. Still protecting their preferred terms for electronic books, the publishers could maintain their 20-25% of net receipts formula for author royalties because the author would be getting more money ($1.75 vs. $1.05 in paperback royalties on a $13.95 physical paperback). Leaving the publisher with $5.25 in margin, more than they’d get from the physical paperback. When you include the savings in paper, printing and binding, freight and warehousing, the margin jumps even more.

This detente would flood the book market with titles that have stood the test of time where demand remains strong–a good incentive for Kindle and iPad buyers–while protecting the physical book distribution business. It would also buy publishers some time to divest the distribution assets that will inevitably erode as e-book selling takes off.”

Buckell write an extremely long piece, but it is worth the read given it comes from a concerned author. He laments that Amazon is attempting to abuse its market power to fix prices and thwart publishers’ ability to implement dynamic pricing. Buckell also describes process of making books in extraordinary detail. He explains his interest in writing this piece in personal terms:

“I’m not trying to exhort anyone to do anything, but to explain the situation I’m in, and to educate. I’m seeing a lot of people state things with certainty (points I try to knock down above) who have no involvement in the trade.

A lot of readers are going to take this out on authors, and I wanted to basically show my homework to explain things that people may not be aware of. People toss out prices of what eBooks ‘should be’ who’ve never even stopped to understand how the math of something like this works. They demand things they’d never demand of a jacket salesman, just because they think economics and supply and demand and volume don’t apply to eBooks. They do.

Seriously. I’ve thought about these things a lot. Mostly because I have a novel series that has not been renewed, and I keep running the numbers to see if I could write it as an eBook, and when I run these numbers, I come up looking at making a few thousand dollars for half a year’s worth of work based on how eBook sell now. Yes, there are a few J.A. Konrath’s selling well on Amazon, but as I’ve linked, other authors aren’t automagically selling thousands of eBooks there. Most who follow these footsteps sell hundreds. Not everyone becomes JK Rowling.”

The last point reminds me of Nassim Taleb’s “The Roots of Unfairness: the Black Swan in Arts and Literature“. Taleb notes that artists and writers work in a field where a few successful people take the majority of the rewards in the industry. He attributes this situation to largely unrecognized random events (luck!) that are highly improbably but have large impact (“Black Swans”). Moreover, he observes:

“The occurrence of the Winner-Take-All effect in any form of intellectual production has been accelerating along with the speed of reproduction and communications.”

So, ironically, e-books will continue the democratization of publishing and reading (through convenience, easy access, and low costs), but the percentage of winners may narrow further even while providing those winners more wealth than ever.

Tom Davenport Discusses New Book: “Analytics at Work: Smarter Decisions Better Results”

Tom Davenport discusses his new book “Analytics at Work: Smarter Decisions Better Results” in Information Week. Davenport and his co-author, Jeanne Harris, wrote this follow-up to:

  1. Provide a guide for creating and promoting analytical capabilities without making analytics a core business strategy.
  2. Emphasize the importance of data governance.
  3. Introduce a formal framework called the DELTA model: Data, Enterprise, Leadership, Targets, and Analysts.

Here is the intro to the article:

“The business best seller Competing on Analytics made the case that there are big rewards for organizations that embrace data-driven decision-making. Offering a preview of his soon-to-be-released follow-up, Analytics at Work: Smarter Decisions Better Results, co-author Thomas H. Davenport , professor of information technology and management at Babson College, recaps the book’s five-stage “DELTA” model for assessing and improving analytical decision-making.”