February 5, 2014
By Sam McNerney
Andrew Yang (@AndrewYangVFA) is the founder and CEO of Venture for America, which trains top college graduates and sends them to start-ups where they learn how to become entrepreneurs. His new book is Smart People Should Build Things: How to Restore our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America. Andrew began as a lawyer making $125,000 a year before he quit to co-found the dot-com company Stargiving. Looking back on his experiences as a lawyer and an entrepreneur, Andrew asks, “What if 25 percent of our top graduates went to start-ups around the country each year instead of to Wall Street?”
McNerney: For our readers who do not know, could you explain Venture for America and its goals?
Yang: Venture for America is a non-profit that recruits, selects, trains, and places top college graduates in start-ups in cities around the country. Our goals are to help revitalize U.S. cities through entrepreneurship and to create a concrete path for aspiring entrepreneurs. Our immediate goal is to help create 100,000 new U.S. jobs by 2025 in 2 ways: help early-stage growth companies access the talent they need to expand, and train a critical mass of our top people to become business builders. We need to get our smart people building things again, and we need to give them a genuine choice to do so.
McNerney: The top graduates of the top schools are flooding into high paying jobs in finance and consulting. You report that “In 2012, of the four Dartmouth valedictorians, two went to Goldman Sachs, one to Morgan Stanley, and one to McKinsey.” What’s the problem here?
Yang: The issue is simply that certain organizations, industries and firms have the money, people, brand equity, time horizon and consistent need for talent that they can become very, very good at recruiting the top prospects at Dartmouth and other schools. It also helps that these firms have a legacy of getting top graduates from the school, pay well, and are located in a city these young people find attractive. It would almost be irrational for them to do something else. Yet what is rational for the individual can, in the aggregate, lead our economy and society someplace we’d rather not be.
McNerney: Let’s say I’m two years out of Harvard. I’ve been working at McKinsey making $100,000 a year, but I don’t find my job meaningful and I’m ready for a change. I can’t find a new opportunity that allows me to maintain my lifestyle—a pay cut is almost inevitable. You refer to this situation as having “golden hand-cuffs.” What should I, or someone in an equivalent situation, do?
Yang: The first thing is to not get used to how much money you’re making, so you can maintain flexibility. A pay cut really hurts only if you think you’re going to get paid that much forever. Next, you need to find an organization that’s growing and doing something you’re excited about, and is led by people you can learn from. Show up at their door and say, “I’m here to help” and then find ways to add value. Within several months you’ll either have responsibilities and a role or you would have learned a lot about the kind of place you want to be.
McNerney: One passage in your book astonished me. You say that after Ebay acquired PayPal in 2002, “PayPal’s founders and employees went on to found or co-found LinkedIn, YouTube, Yelp, Tesla Motors, SpaceX, Yammer, 500 Start-ups and many other companies.” Do you think we’re underestimating the impact entrepreneurs and start-ups are having on the economy?
Yang: Potentially, though PayPal is perhaps the most prolific of companies in this way. Their alums are legendary. If anything, we are likely underestimating the potential value of having more people who are well-equipped to build something. You learn from the organizations you’re in. If you have more companies like PayPal training more and more experienced builders, the potential is limitless.
McNerney: What advice would you give to an intelligent and capable 2014 grad (who could go into consulting or finance or get an advanced degree) who has an itch to become an entrepreneur?
Yang: There isn’t an easy answer. With Venture for America, we’re saying “go learn how a business gets built for 2 years,” which we obviously believe is the right way to go. But people who head to professional services or grad schools can still go on to do great things. The issue is that they need to remain somewhat immune from the cultures around them. If you become an academic, all of the forces around you will be telling you to do things that will benefit your academic career, not your eventual start-up. The same is true in professional service firms.
McNerney: What are the biggest myths about what it takes to be an entrepreneur?
Yang: First, no one’s born an entrepreneur, in the sense that everyone learns from their experiences and gets better over time. Bill Gates’s first company before Microsoft didn’t work out. Henry Ford’s first car company went out of business. They learned and got better. If you want to be an entrepreneur, you need to put yourself into position to iterate, likely stumble and fail, and then get back up stronger. This process typically takes years. Second, that entrepreneurship is about creativity. It’s less about creativity than it is persistence, determination and problem-solving. Last, entrepreneurship is less an individual activity than a team sport. Every entrepreneur needs a set of talented people around him or her to do what they do.
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