The Unreasonable Effectiveness of IIT

IIT founders are still underrated

My father immigrated to the US from India in 1977. He landed in West Virginia without money for a security deposit for his first apartment, not even knowing what the term “security deposit” meant.

In some ways, you might think this is just another example of the trope of the immigrant arriving in America with “only five dollars in their pocket.”

Like any cliche, it has a grain of truth. But fortunately for him and the US, he came armed with a degree in chemical engineering from the Indian Institute of Technology (IIT) Kanpur, which he eventually parlayed into a decades long career designing next-generation nuclear energy technology like AP1000 reactors and accident tolerant fuel.

His roommate from IIT-Kanpur also ended up emigrating to the US at the same time and ended up founding a multi-billion dollar transportation company. 

This was before the era the IIT system was widely recognized as producing some of the top engineers and business people around the world.

But even now I think the IIT talent pool, particularly startup founders, in the US is still massively underrated. I don't hear investors fixate on IIT founders like they do with AI, YC, and Stanford founders.

IIT founders are formidable not because of any particular educational methodology, but because of the insane sequenced selection effects - particularly related to intelligence, boldness, and stamina -  that result from the process of getting into IIT and eventually starting a company in the US.

Think about it: first you need to pass what some call the toughest entrance exam in the world, which essentially functions as an extremely selective intelligence test.

By some estimates, only the top 0.5-1% of scorers of over 1.5 million applicants across India are accepted each year. 

Then, to immigrate to the US, you need to be relatively high in boldness to give up everything you’ve previously known.

Even more, if you decide to start a company in the US, you have to be persistent enough to brave the maddening visa system and the potential you could be deported if things don’t work out.

All of this takes tremendous stamina - which Tyler Cowen and Daniel Gross shrewdly point out as a profoundly underrated quality when evaluating talent.

The process to become an IIT founder in the US constitutes its own startup Great Filter of sorts.

As it turns out, we’ve had a few decades to see this filter play out, and the results have been stunning.

Just in the US alone, IIT alums have founded an incredible list of unicorns, including the founders of Perplexity, AppDynamics, Nutanix, Rubrik, Thoughtspot, Cohesity, Palo Alto Networks, Zscaler, Innovaccer, and Juniper Networks. 

In a previous venture vintage, last reported in 2017, the fourth largest producer of startup unicorns were IIT colleges in India, behind Harvard, Stanford, and the University of California system. 

And it’s not just founders, but leaders in the technology industry like Vinod Khosla and Sundar Pichai and inventors like Arogyaswami Paulraj (pioneer of MIMO technology undergirding wifi/5g networks today) and Vinod Dham (considered the “Father of the Pentium chip”). 

Venture investors usually evaluate startups by assessing a mix of factors like defensible IP, market size, product market fit, founder market fit, etc.

But the problem with such a mush of concepts is that can obscure the simplest and most important factor behind startup success in my opinion, aside from luck: the pre-existing intelligence, boldness, and stamina of the founders. 

Of course, such characteristics can be found in many founders of various educational backgrounds, many who didn’t attend or dropped out of college. And I strongly believe pre-existing talent can be developed and honed on the margin. 

But I can’t help but reflect that IIT founders are an incredible but still underrated talent pool, with what seem to be high base rates of success.

If Congress had any sense, our legislators would be rushing to pass laws that would offer near-instant visa approvals to IIT founders starting companies in the US.

Both investors and bureaucrats underestimate them at their own peril.