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Signaling goes beyond just a college degree. There are signals on signals on signals. McKinsey can charge out their case teams at $1 million/week. Why? It might start with their nickname of “McHarvard” where they recruit seemingly endless numbers of Harvard graduates, Rhodes Scholars, and other talented young people from brand-name schools so they can market every case team as being full of “whiz kids.” A million/week for primarily 22- to 26-year-olds with limited work experience on your most pressing business issues? It sounds like a scam. But these young people went to a top college. Okay, then that makes sense.

Now let's think about Silicon Valley. My cofounders at Crimson have been able to raise more than $US60 million before our 25th birthdays. This is our first business. We have no track record. Prior to going to Harvard, I really genuinely thought entrepreneurship was what you said you would do if you found yourself unemployed. This is rare but it is by no means a major exception. The most popular schools of unicorn founders (companies valued above $US1 billion) in the US were Stanford, Harvard, UC Berkeley, MIT, and the University of Pennsylvania (Wharton School of Business).ssss1 As a venture capitalist writing big checks with other people's money, being able to assure your investors that your entrepreneur is “investable” (a term I first heard from GGV investor Hans Tung, that is, they have impressive academic credentials that give a good clue that the person is of substance and likely to succeed) captures the power of signaling perfectly.

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