Miami, here we come!

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We are so excited to announce today that thanks to the support of the Knight Foundation, Venture for America will be expanding to Miami in 2014!

We’d like to extend a special thanks to all the talented entrepreneurs and incredible organizations leading the charge to create a thriving startup ecosystem there–we couldn’t be more thrilled to send a crew of our talented (and lucky!) 2014 Fellows to help Miami’s businesses grow.

Check out the blog post below from our Founder Andrew Yang about VFA’s Miami expansion.


(Originally published on the Knight Foundation blog)

Ask a startup CEO what she needs most, and – after the knee-jerk reaction, “Money!” – she is likely to tell you that her biggest challenge is finding great talent. Next, ask a smart and enterprising young person what he wants most out of an entry-level job, and he will likely say he wants to gain skills, make career progress and do something meaningful – exactly the opportunities a startup can provide.

Why can’t these two people meet one another? Because armies of suits show up on college campuses each year, and funnel our best and brightest off to financial services and consulting firms in a handful of cities. Startups in Miami have no coordinated way to access these channels, and young people have no systematized means for finding or vetting startup opportunities. That’s where Venture for America comes in: We level the playing field so that the startup CEO can find highly vetted talent that is eager to go to work for her and make an impact. Essentially, Venture for America is a two-year fellowship program that places recent college graduates with promising startup companies in U.S. cities with significant human capital needs. We currently operate in eight cities, and Miami is our next destination.

We all know that entrepreneurship is the engine of job growth in America, and that many of our historically great cities are in serious need of job creation. What you may not know is that for every one person an innovation-oriented firm hires, five new jobs quickly follow in the wider community. Imagine if the same proportion of talent that currently flows to professional services went instead to startups and early-stage growth companies in Miami. How long would that take to meaningfully impact job growth and innovation?

Venture for America has found all the right ingredients in Miami: a bevy of entrepreneurs, such as Brian Brackeen of Kairos and Andres Moreno of Open English, who have staked out this incredible community to grow their companies; a contingent of ecosystem-supporting organizations, such as The LAB Miami, Endeavor, Refresh Miami and Rokk3r Labs, which are working overtime to build a thriving entrepreneurial community; and community leaders and investors – including Knight Foundation – that are providing the capital necessary to see it all through. We want to add another key piece to this puzzle by helping draw young talent to Miami’s urban core.

Venture for America’s mission is to revitalize American cities and communities through entrepreneurship. In the coming years, we plan to help dozens of talented recent college graduates get to work at exciting startups in Miami. Ultimately, we hope they will put down roots and set up shop as entrepreneurs in their own right, creating a virtuous cycle of job growth and economic development.

How do we know this will work? Because we are watching it happen in other communities. Venture for America launched in Detroit (as well as Las Vegas, New Orleans, Providence, R.I., and Cincinnati). Since arriving in Detroit, our class of 12 VFA Fellows has bought a foreclosed mansion at auction and are rehabbing it on weekends, started a nonprofit organization that teaches entrepreneurship skills to underserved middle school students, and started companies such as Banza – which makes a high-protein chickpea-based pasta – with manufacturing in Michigan. This is in addition to playing vital roles at companies that are growing rapidly. We are excited to see what our VFA Fellows will do in Miami – with the support of Knight Foundation and all of our friends in its incredibly welcoming entrepreneurial community.

2014 Summer Celebration: Tickets now on sale!

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We hope you can join us for our 3rd Annual Summer Celebration!

There’s no better way to celebrate VFA than joining our friends, supporters, and Fellows for our annual #VFAParty. If you didn’t get a chance to join us last year, check out a recap here.

Advanced Tickets (Until May 15th at 11:59pm): $300
General Admission Tickets (After May 15th): $400
VIP Tickets: $1000

Get your tickets today!

We’re thrilled to have keynote speaker Dan Gilbert, Founder & Chairman of Quicken Loans and Rock Ventures, join us for this year’s Detroit-themed bash to talk about his work transforming the city.

#OpportunityDetroit

We hope to see you there! Please e-mail events@ventureforamerica.org with questions.

Tiles for 2014 Summer Celebration Page

Tulane Campus Ambassador Experiences 3 Day Startup

Zoe Chaves

 

Name: Ethan Levy

Hometown: Baltimore, Maryland

University: Tulane University ’16

Majors: International Studies & Business

Company: ComeFail

 

One of our promising young entrepreneurs working as a campus ambassador at Tulane University, Ethan Levy, recently participated in 3 Day Startup (3DS), a non-profit organization that seeks to kick-start student-run companies and build entrepreneurial capabilities in university communities through their program. It’s like Startup Weekend, geared exclusively toward talented college students.  They are a tremendous organization that has conducted over 100 programs on 5 continents and have launched 54 companies that have received over $18 million in funding. As VFA continues to grow, we look forward to partnering with 3DS and other organizations that are making entrepreneurship a viable path for young people in college and after graduation.

Check out our recent interview with Ethan where we dive into his experience with VFA, 3DS and how both are helping him launch his new venture, ComeFail.

Q | How did you first catch the entrepreneurial bug?

I caught the entrepreneurial bug when I was 7 years old, when I was on a 5-day hike with my family. As a seven-year old, hiking seemed long and painful. But what really got to me was boredom. There was nothing to do but hike. So I started thinking and came up with a “business plan,” which would make me CEO of a store called “Which What Who.” At first I would sell my collections, but later I would sell practically anything that my customers wanted for a really good price! I spent the day sorting out all of the details with my family, and they all agreed to work in my store. It was encouraging. I ranted about my store for eight whole hours. Although bizarre, it was on that summer day that I decided my dream was to become an entrepreneur.

Q | How did you first get involved with VFA?

Various people had referred me to VFA, but I never understood what it was or took it seriously until I met Sean Rowland, the campus ambassador at Loyola University in New Orleans. After learning more about the program, I was intrigued. After meeting with Joe Guy, Community Marketing Manager at VFA, I was convinced that I should get more involved by becoming a campus ambassador at Tulane.

Q | Can you tell us a little bit about the venture you are starting?

I am starting a venture called ComeFail, which is an online platform for student entrepreneurs to share their ideas, improve them, and attract the resources they need as their businesses grow. Built on the philosophy that (smart) failures produce amazing growth, ComeFail is a safe space for young, college entrepreneurs to get their hands dirty. Our purpose is to increase the number of entrepreneurs and their likelihood of success, and by redefining the culture of failure, we aim to minimize fear and maximize self-improvement.

Q | What led you to participate in 3DS?

I first heard of 3DS when I was participating in Startup Weekend. Students from the University of New Orleans recommended that I participate, since it would be a great opportunity for me to connect with other students and grow my business.

Q | Could you describe the 3DS experience at a high level?

3 Day Startup is an event that brings students together for 3 days to work on startups. Having now participated, I can say it’s an incredible experience. 3DS encourages students to spend one weekend in the startup field, giving students a taste of the startup lifestyle and all of its great energy. Students are rarely given the opportunity to get away from schoolwork and social life to work on their ideas. 3DS gives students that opportunity.

Check out this brief documentary that shows students in action at 3DS.

Q | How did your venture change and improve as a result of 3DS?

Thanks to the 3DS experience, my venture grew more in 3 days than it did in 15 months. I came into the 3DS event with a concept called Launchange, which was a concept for an online platform that would connect students within universities based on skills and interests so they could build businesses together. Launchange was one of two ideas that were selected. After being grilled with tough questions from the 3DS faculty advisor, I was convinced that Launchange was not worth building. This led me to pivot to ComeFail. I believe that our product is now much stronger and more likely to succeed. Also, my teammates (who participated in the event with me and are pictured below) are more excited. Shortly put, 3DS energized my team and improved our product significantly.

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Q | What advice would you give a student that’s interested in building something?

Go for it. Fail early and fail fast. Learn with each failure. Embrace uncertainty. Have an open mind. Have fun during the process. Be up for the challenge. Be resilient. Starting a business can be tough, so you have to learn to enjoy the process.


Ethan is just one of 60 individuals officially representing VFA at universities across the country. His experience at 3DS is just one example of the many opportunities available to our campus ambassadors.  If you are interested in joining our team, learn more about the position and apply on our jobs page.

[EXCERPT] Team of Builders

Check out the final excerpt from “Smart People Should Build Things” below, as seen on FastCompany.com. You can still get your copy at www.smartpeopleshouldbuildthings.com!


Who was the eighth employee at Google back in 1999?

I don’t know either; I tried to Google it and couldn’t find out. But I’m pretty confident that the eighth employee joined before the company was cool, built some amazing things, and had an incredible experience—and is now loaded.

Google is perhaps the most important and influential company in the country today. But most people can only name its founders, Larry Page and Sergey Brin, and maybe its former CEO Eric Schmidt. Same thing with Amazon and Jeff Bezos, Apple and Steve Jobs or Tim Cook, or Starbucks and Howard Schultz. We have a very human tendency to associate large organizations with their leaders, particularly if, as in the cases above, the leader is also the founder. It makes the narrative easy. You can show a picture of the person, interview him or her, and ask for lessons learned. This also shapes people’s aspirations; hundreds of books and classes on entrepreneurship exist to teach us how we can be a bit more like these visionary leaders. It’s as if Howard is actually running around and opening all of those Starbucks branches in our neighborhoods.

But with every growth company story, there’s a whole team of capable, talented, motivated people who have worked for years to make it happen and whose lives have been transformed as a result. It’s not just the founder—it’s the people who have been a part of the organization throughout its progression. If a company happens to go on to become a household name, as in the cases above, you typically have dozens or hundreds of early employees who have their careers defined by it.

The vast majority of companies don’t go public and mint dozens of millionaires. And most companies don’t go around doling out stock options; private companies tend to be very tight about ownership. But the same collective transformation is true on a lesser scale with any growth company that makes headway. At Manhattan GMAT, Danielle DiCiaccio started straight out of college in 2006 as an entry-level hire and now runs a whole department. It’s very different being a director at a $20 million company from working at a $2 million company—imagine seeing and making that happen throughout your twenties. Moreover, you’d know and trust the people you’re working with because you’ve been a part of the team that built the enterprise to that level.

Sounds great, right? You’re thinking, Sign me up! The trick is that by the time it’s evident that a company is going to take off, it’s often too late to be a big part of the team. If I joined Google today as employee number 53,862, no one would care. But back in the day, Google was no sure thing. Larry and Sergey even offered to sell Google to Excite in 1999 for $1 million, which Excite’s CEO turned down at the time (to his eternal regret).

So it’s a bit of a bet. You want to join a team before it’s cool and hope that the company takes off. If it does, you could have yourself a very good run. You could even wind up being the difference between the company taking off and languishing on a small scale. Maybe you will attain a position of real responsibility—maybe it even gives you a career. If it doesn’t work out, you almost certainly will have developed some skills that will make you a contributor for the next thing.

These people—the builders who work with the founders to help these companies grow and prosper—are, in many ways, more appropriate role models. The plan should not be, for the most part, “start a company.” More realistically, the plan should be “join a team.” If you’re positioned to start your own organization, that’s great—but rare. You’ve got an unusual profile.

If you join a growth organization, you’ll likely do different things in different roles throughout your career. It’s excellent to learn and build with others. You’ll meet people you want to work with. If you have a good run, you can always come back and start something later. For example, Alexis Maybank worked at eBay with Jeff Skoll for years. She launched and ran eBay Canada and helped start eBay Motors. Years later, she went on to cofound Gilt Groupe, a major e-commerce company that makes my wife and many others happy.

And it’s not just coders and engineers that these new companies need. Just about any growth company is going to need smart salespeople, account and project managers, business development, marketing, operations, customer service, content creation, communications, analytics, and social media. If I told you that there’s a startup company in New York founded in 2005 that has grown to over $1 billion in revenue with over 1,000 employees, you would probably think it must be a tech or finance company. But it’s not. It’s yogurt maker Chobani, founded by Hamdi Ulukaya, a Turkish immigrant who bought a defunct yogurt plant in New Berlin, New York, in 2005. Now it’s the top-selling yogurt in the country (and quite tasty). I’m sure the eighth employee at Chobani is also having a pretty good run.

Make no mistake—it’s not easy to find or pick a good team or early-stage company to join. Even professional investors mess this up all the time and they’re looking at dozens of companies for a living. You hope to find an outfit with experienced, high-character, capable leaders. As we’ve seen, even if everything is in place most companies will not achieve their goals. Have confidence that if the company doesn’t work out, you will take lessons from the experience and apply them to your next endeavor, giving it a much greater chance for success. People can grow from adversity as much as they do from prosperity.

When the tech bubble burst in 2001, virtually everyone I knew lost his job as companies flamed out right and left—mine included. Some people did something totally random to pay the bills for a while as the smoke cleared (like teach the GMAT). But most everyone bounced back. My friend Robin worked for a company that went under; then he went corporate for a little while, and then years later he started a company that was acquired by Zynga. My friend Brian, who worked with me at Stargiving, also went corporate brieflyand later became an independent film producer who produced a successful documentary on a then obscure college basketball player named Jeremy Lin. Another friend whose business went under, Matt, became the cofounder of a tech company called Videolicious that’s funded by Amazon.

We’d all gotten in the habit of building things. Sometimes you’re the founder, sometimes you’re a team member, and sometimes you’re just in the vicinity and scheming. But once you become a builder, it’s hard to let go.


From SMART PEOPLE SHOULD BUILD THINGS by Andrew Yang© 2014 Andrew Yang. Reprinted courtesy of Harper Business, an imprint of HarperCollins Publishers.

[EXCERPT] The Qualities We Need

Check out the latest excerpt from “Smart People Should Build Things” as seen on FastCompany.com. Purchase your copy today at www.SmartPeopleShouldBuildThings.com!


A friend told me about a young Princeton graduate she knew named Cole. Cole studied mathematics and went to work for a hedge fund directly out of school. He’s now making well into six figures at the age of twenty-four. That’s his whole story to date.

That’s success and the American way. And yet how excited are you about Cole’s trajectory? Think about it for a second. I’ll admit that I’m not too psyched about it, even though I have friends at hedge funds who are very intelligent, stand-up guys and even philanthropists, and I know that hedge funds are positive in that they provide diversified investment opportunities to large pools of capital.

My lack of enthusiasm comes down to a few things. If Cole successfully analyzes an opportunity for the hedge fund and it invests slightly more effectively, that will be a win for the fund’s managers and its investors. But there will very likely be an equivalent loss on the other side of the investment (whoever sold it to them makes out slightly less well for having undervalued the asset). It’s not clear what the macroeconomic benefit is, unless you either favor the hedge fund’s investors over others or have a very abstract view toward capital markets working efficiently.

Cole is almost certainly very smart. But what has he done to merit his almost immediately elevated stature in life? He’s never hazarded anything. He hasn’t demonstrated any outstanding character or virtue, unless you consider studying math and being really smart intrinsically virtuous. He’s never had to go against the grain or go out on a limb. His rewards seem a little bit exaggerated for his accomplishments.

Finally, Cole’s life is very quickly going to become quite different from that of the vast majority of humanity. His housing, education, and professional circles will take him into rarefied air. He’ll donate to causes and he’ll retain an intellectual interest in policy matters. But his experiences are going to be wildly divergent and probably make it tougher for him to understand others’ customary everyday concerns and struggles over the coming years. Ultimately, Cole’s pursuits don’t reflect a sense of value creation, risk and reward, or the common good.

Not to say that Cole’s not a good dude. I have no idea. I’ve never met him. And if your daughter got engaged to him five years from now you would probably think she was all set (and your grandkids would be good at math).

Our culture of achievement has grown to emphasize visions of success that are, for the most part, fairly predictable. Cole skipped a couple of steps. The basic plan is to go to Goldman Sachs, McKinsey, or the like, then maybe to a top-ranked business school, then back to banking, consulting, private equity, hedge funds, or a name-brand tech company. Or maybe go from law school to top firm to partner or in-house at an investment firm, and live in New York, San Francisco, Boston, or Washington, DC.*

Again, these institutions and roles are necessary, and they’re natural developments in our economy. We need them. But we need people doing other things too. We need people willing to take risks and, yes, to occasionally fail. Like real-world consequences fail. We need people committed over extended periods of time to creating value, no matter how hard that is. We need people who care deeply about the work they’re doing.

Imagine someone who you think could stand to take on some risk—someone well educated who would always have something to fall back on, whose family might have some resources so he would be unlikely to starve. And this person would probably be young and free of major life obligations. Someone sort of like . . . Cole.

What’s interesting is that many of the people I meet who are young, highly educated, and from good families are among the most risk-averse. They feel like they need to be making progress along a ladder with each passing month or year. Their parents have often set high expectations for them. They measure themselves each period against their peers, who are generally following various well-defined paths.

Yet, as Reid Hoffman, the founder of LinkedIn, and others have pointed out, remarkable careers are unlikely to advance in a straightforward, linear fashion. They are more likely to contain breakout opportunities that lead to unusually rapid gains (and, of course, relative dips and plateaus).

We need smart and hardworking people to build businesses around the country as much as or more than we need them to do anything else. We need more intelligent risk takers and value creators who see their communities reflected in the work they do. We need to restore the culture of achievement to include value creation, risk and reward, and the common good so that more of our top people are in position to create new enterprises and opportunities.

If we succeed in this, our best and brightest will build the engines of future economic growth. If we don’t, our talent will continue to heed purely market-based incentives, our economy will likely continue to underperform, and our culture will become more and more bifurcated.

I just had a son. I’d like him to be very well educated. But I don’t want him to necessarily enter a parallel universe where everyone is smart, well paid, and well dressed while the rest of the country wonders where the jobs went.

This is easy to say, but very hard to achieve. People like Cole have every factor turning them toward their current choices; they’re heavily recruited and offered money, prestige, training, a network, community, and opened doors. Expecting people like Cole to completely ignore these inducements is unrealistic.

What would the ideal be? There’s a renewable energy startup in Providence, Rhode Island, called VCharge that probably could have used Cole too. Its chief science officer, Jessica Millar, has a PhD in math from MIT. VCharge is trying to make our energy grid more efficient using energy storage and transmission algorithms. It’s not a sure thing, but if it succeeds we’ll all be better off for it.

How could you get Cole to head to VCharge instead of to the hedge fund? First, you would hope that immediate income maximization is not the main driver—maybe Cole has a longer time horizon, believes he can make money down the road, and thinks that tinkering with the power grid sounds interesting. Maybe he even has an instinct toward value creation, building things, and having an impact. And second, you could employ resources to recruit him and offer him prestige, training, network, a community, and open doors to head in that direction. You could make it a rational, principled choice as opposed to a vague hope that he decides to do something value creating.

One entrepreneur I met said, “You don’t want to be in the army, you want to be an arms dealer.” He meant that you want to build a business that doesn’t rely upon someone winning or losing but that would benefit from supplying both sides (say, a component manufacturer like Qualcomm that sells to all smartphones, as opposed to a smartphone manufacturer that has to duke it out in competition with the others).

The quote sounded smart, but I’ve concluded that if our young people all follow his advice, we’re sunk.

One reason the finance business is always busy is that it functions much like the arms dealer. You don’t need to figure out precisely who’s going to win or lose. You wait until a business gets to a certain point, and then you help them access capital in the form of equity or debt, give them a credit line, and help them get acquired. And if a company goes down, you’re there to assist with reorganizations, divestitures, and
bankruptcies.

Yet the real innovation and value are being created by the fighters who are forming little squads and cobbling together businesses. Some fail, some succeed. If they succeed, they wind up building an army that’s providing new software, better services, tastier food, or whatever else the world needs. They also create organizations that form the character of the people in the army who believe in what they’re doing.

Which would you rather have, better arms dealers or better fighters? And which should our young people want to be?

Personally, I always dreamed about going into the woods and fighting the dragon, not selling the guy a sword.

* There’s also the path of going to med school, becoming a surgeon or other specialist and performing procedures three or four days a week. We have an acute shortage of primary care physicians because the achievers we cultivate to be doctors adopt rational incentives: if they specialize they’ll make more money and likely work fewer hours than if they’re frontline doctors who see patients every day.


From SMART PEOPLE SHOULD BUILD THINGS by Andrew Yang© 2014 Andrew Yang. Reprinted courtesy of Harper Business, an imprint of HarperCollins Publishers.

[EXCERPT] How to Build a Culture of Risk-Taking

“Smart People Should Build Things” is on sale now! Check out the latest excerpt below. To purchase your very own copy visit SmartPeopleShouldBuildThings.com


Let’s say that you were to line up a hundred brilliant twenty-one-year-olds who might have the potential to start a company someday. You tell them, “Okay, you have two choices. You can commit to being an entrepreneur and start a company. There’s a ten percent chance that you become extraordinarily successful, wealthy and create hundreds of jobs. There’s a twenty-five percent chance that you’re a modest success. And there’s a sixty-five percent chance that you toil in obscurity for years and your confidence diminishes, potentially damaging your attractiveness to potential mates even if you later become more conventional. Alternatively, you can commit to a high-paying career at a well-regarded company, and there’s a ninety-five percent chance you’ll succeed by most conventional standards.”

What would these one hundred brilliant twenty-one- year olds do? Most of them would probably opt for the latter path, because they only have one outcome to consider—their own. They have one life to live, and both the chances of failure and the consequences may come across as unacceptably high. These individuals have often been successful at whatever they’ve put their minds to up to this point, which may make taking on risks unappealing. Plus, their parents likely invested considerable resources getting them to this point, increasing the pressure to ensure a return. And they’re confident that they’ll get dates, learn things, be around other smart people, and make lots of money at a name-brand firm, regardless of their other ambitions.

Let’s change the scenario a little bit. What would happen if you were to line up the same twenty-one-year-olds and have them all spend two years working together and becoming friends? Then you give them the same choice, but with this change: “You will all agree that if you become an extraordinarily successful entrepreneur, you will share the rewards with the other ninety-nine people in this room by hiring as many of them for your venture as you can.” Would this change anything?

Now, each person’s risk would be significantly reduced as long as someone in the cohort does extremely well. As long as one person becomes Jeff Bezos, the downside risk is a position as vice president of something or other at Amazon. That doesn’t seem bad at all. Taking the risky path may be a more reasonable bet for each as a result of the collective understanding.

One way to get a greater number of our most talented young people to embark on the higher-risk, higher-reward path would be to create a community and network oriented around starting new enterprises. It’s a lot easier to take risks if you’re part of a group whose members will look out for each other.

There’s a country that does something a little like this. Its young people, including its very best educational prospects from all different backgrounds, spend two or three years training and solving problems in a nonhierarchical environment and get together every year. Many then collaborate to start companies. This country leads the world in venture capital investments per capita (over $170, versus $75 in the United States in 2010). It has more companies on the NASDAQ than any non-US country except for China, despite having a population of less than eight million. Its quarterly gross domestic product (GDP) growth rate was above 5 percent in 2011 and it’s in the top thirty globally in per capita GDP, above Spain and Saudi Arabia, among others.

This country is Israel, where eighteen-year- olds complete two or three-year tours in the military getting to know each other in highly selective military units. They operate at a high level of autonomy and responsibility and then travel the world for months before heading to college and/or grad school. In Dan Senor and Saul Singer’s book Start-up Nation, this network and training ground is credited as helping give rise to a culture of risk taking and entrepreneurship. By the time Israelis graduate from college, they’re in their midtwenties and mature; in many cases, they’ve already been in operating environments and borne life-and-death responsibilities. This cocktail of experience gives rise to a mixture of both courage and impatience. As one entrepreneur put it, “When an Israeli entrepreneur has a business idea, he will start it that week. The notion that one should accumulate credentials before launching a venture simply does not exist. . . . Too much time can only teach you what can go wrong, not what could be transformative.” Another observer commented, “Israelis . . . don’t care about the social price of failure and they develop their projects regardless of the economic . . . situation.”

In the United States, many college seniors have been students continuously for seventeen years, with their professional experience limited to a summer internship or two. Four-year graduation rates at elite US schools are very high (90 percent for Georgetown and Notre Dame, 89 percent for Yale and Columbia, and so on), demonstrating that most top students are finishing college without significant interruption. It’s not surprising that it might be natural for these graduates to continue to keep their heads down and seek the next step of advancement at every turn, particularly if they were reared in an era of hypercompetitive college admissions.

A group of college educators and administrators has observed that “the pressures on today’s students seem far more intense than those placed on previous generations . . . Even ‘play-time’ is often structured and enriched with just the right mix . . . Summer vacations have become a thing of the past. . . . By high school the pressure intensifies. Students start to specialize in one activity even to the exclusion of other pursuits . . . the ‘right’ graduate school looms after college, and the ‘right’ sequence of jobs is next.” This culture of perpetual advancement fosters the opposite of the Israeli risk-taking I-don’t-care-about-the-social-cost-of-failure attitude.

If we want to encourage a greater variety of postgraduate pursuits, we should give our young people time to look up and explore different options during their college careers. While requiring national service along the lines of the Israel Defense Forces is unlikely, working in different environments for a year or more would give students a sense of how their schoolwork intersects with what they might want to do in the long term. This in turn could make their goals more diverse and independent.

A friend of mine, Neetu, was a top student in Canada. She participated in a cooperative industry education program that had her take the equivalent of a year off between her sophomore and junior years in college. She spent four months working as a marketing associate and youth industry intern for the Calgary Immigrant Aid Society. Then she spent eight months as a business development researcher at a large oil and gas company. Neetu realized that she preferred the private sector because of the higher efficiency and ability to get things done. She took another semester off to intern at a small advertising and design firm. Her experiences influenced how she approached her studies during her senior year in college and how they would be applied in the real world. She began sitting in on advanced courses and joined a marketing club. When she graduated, she went to work as a marketing and communications specialist at an education tech company called Smart Technologies, which she became connected to through a recommendation from the design firm. Smart Technologies went public three years later, in 2010. Neetu credits her year off with both making her studies more productive and giving her more insight into what sort of work and work environment she’d enjoy.

Cooperative programs like the one Neetu participated in are something of a rarity in the United States. If this changed, perhaps our college grads’ choices would change as well. The impact would be compounded if we had people spend months in teams operating and solving problems as the Israelis do; they’d emerge with not only a broader perspective but also with relationships they could call on when it’s time to build something.


From SMART PEOPLE SHOULD BUILD THINGS by Andrew Yang© 2014 Andrew Yang. Reprinted courtesy of Harper Business, an imprint of HarperCollins Publishers.

[Excerpt] The War for Talent

Check out the latest excerpt from “Smart People Should Build Things” as seen on BusinessInsider.com. The book is on sale now! To purchase your very own copy visit www.SmartPeopleShouldBuildThings.com.


One reason why the hyperallocation of talent to certain industries, regions, and firms goes ignored is that it combines narratives no one wants to talk about. Our economy has progressed from making things to supplying financial services. It’s not the first time an economy has made this transition. Both the Netherlands and Great Britain were global manufacturing powers in their day. The British supplanted the Dutch in the early 1800s. We supplanted the British in the early 1900s. The Dutch and British then turned to financial services and insurance as the drivers of their economies. Unfortunately, it’s hard for an economy to rely solely on financial services, and both countries receded from the world stage.*

We no longer manufacture devices, we manufacture analyses. Investment banks, private equity firms, corporate law firms, and management consultancies are all vitally important to today’s US economy. They serve crucial roles in helping companies raise capital, get acquired, document complex transactions, and integrate new technologies, among plenty of other necessary tasks.

These types of professional service firms operate in incredibly competitive contexts. Their sustained success hinges on the type of people they have working for them. Everything is honed to a razor’s edge. They thus focus assiduously on getting the very smartest people that they can inside their walls. They invest millions in this process and offer prestige, high-starting salaries, training, expense accounts, and the promise of community and open doors.

As one of the cofounders of a major management consulting explained it to me,

“We loved to recruit at the top schools because we knew there’d be good hires on campus. It was just a matter of putting resources to work, improving our funnel and tweaking variables until we found them. We would figure out which classes were indicative of intellectual ability and which were just padding, what leadership positions were significant, what majors tended to do well. . . . The more years we spent on campus the better we would get at it. We wanted to get a certain number of recruits from each of our top campuses each year so there would be a constant stream of personal referrals and connections. If we didn’t get someone for a few years it was a lot tougher to restart at that school.”

It’s very admirable and well executed—exactly what you would hope the consulting firm would do if you were a shareholder.  But this firm is jockeying for position with dozens of other firms that implement the same sort of process. And before long you have a sort of tragedy of the commons, where the firms are all grazing on the same field to depletion.

To give a sense of the resources being dedicated to this effort, Teach for America’s recruitment and selection budget alone in 2011 was $37.6 million. A friend who works in financial services recruiting estimated that her firm spends $50,000 per recruit. If you project the analogous expenditures from every major bank and consulting firm to develop talent pipelines, you have tens if not hundreds of millions being spent each year at campuses across the country.  One hedge fund spends so much on recruitment that it offered to pay Dartmouth students a hundred dollars each to tell the company why they chose not to participate in its recruitment process.  In 2012, of the four Dartmouth valedictorians, two went to Goldman Sachs, one to Morgan Stanley, and one to McKinsey

There’s an arms race for the best talent at dozens of universities each year. To be clear, no one’s at fault. Private firms ought to be doing their utmost to maximize their own well-being. In this case, that means getting on campus, spending time and money, and fighting it out for the top educational prospects in the country.

The recruitment culture gives rise to a general pursuit of pathways of prestige as undergrads see those around them heading down well-defined tracks and look to do the same. Most banks and consulting firms make offers between August and December of a student’s senior year; imagine being a competitive and slightly insecure senior watching this process unfold around you.

What is the result of this war for talent? Statistics are measured and reported differently, but here’s the general picture for top university grads, measured over the last several years of available data.

Postgraduate Pursuits of National University Graduates

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Take a minute to survey these numbers. While there’s some variation (i.e., more Yale grads go to law school, more people from Johns Hopkins go to med school, and so on), you get a sense that they’re all pretty similar in terms of breakdown.

As you can see, a literal majority of national university graduates will pursue one of these six paths after graduation, none of which leads directly to new business formation or growth. What begins as a universe of options quickly shrinks to just a few.

I’ve spoken to hundreds of college seniors who are in this predicament on the front lines. Some examples of the things I heard:

• “If I go to career services, they’ll tell me straight out that they only have finance and consulting jobs for me to look at. That or Teach for America.”

• “It seems like everywhere you look people are in suits scurrying to another banking interview. It has an effect on you after a while.”

• “My friend tried to look for a job at a startup, but it was really difficult. Eventually he gave up and joined a consulting firm.”

Some observers mistakenly believe that the recent downturn in financial services and the existence of the movie The Social Network mean that the world has changed. But the reality on the ground is determined by which organizations have the resources, brand equity, know-how, time horizon, and consistent and predictable need for new recruits to go on campus and roll out the welcome wagon. These factors have remained more or less constant even after the financial crisis.

Let’s say that you’re a small growth company that wants to hire a few top prospects to help fuel your growth. It’s not going to be easy. First, you’d have to start trying to hire months in advance, even though your needs may change by the time the hire shows up. You’d have to dedicate scarce staff time and resources to sign up for career fairs, post job descriptions, and show up on campuses that might be several states away. You’d have to compete side by side against name-brand companies with giant displays and well-dressed alumni. You’d have to make a competitive offer against firms that are offering outsize wages and likely recruiting multiple people at once. You’d struggle to get the attention of career services officers because you’re probably only looking to hire one or two college seniors. You’d have to evaluate candidates for fit. And after all that, there’s little guarantee that you’d actually get your man or woman.

It’s a daunting landscape that doesn’t serve the little firm very well, so most don’t bother trying to go down this road. Yet it’s these small firms that will potentially expand, innovate, and hire more and more people if they mature to a certain stage of development.

*For an in-depth discussion of this progression, see Samuel P. Huntington’s The Clash of Civilizations and the Remaking of World Order (New York: Touchstone, 1996).


From SMART PEOPLE SHOULD BUILD THINGS by Andrew Yang© 2014 Andrew Yang. Reprinted courtesy of Harper Business, an imprint of HarperCollins Publishers.

 

CBS Evening News visits VFA Training Camp

This summer while we were at Brown University in Providence, CBS Evening News came by to find out just what our Fellows are all about.

Check out the story below to hear from Avery Houser (’13) and Mike Mayer (’12), see the Fellows in action at Training Camp, and even get a peek inside one of our Providence partner companies (and huge success story!), Teespring.

[Excerpt] Professional Services as Business Training

There’s fewer than two weeks left until the release of “Smart People Should Build Things” by our Founder, Andrew Yang! We’ve released a handful of excerpts over the past few weeks, and you can check back for even more between now and the February 4th release.

To pre-order your copy today, visit SmartPeopleShouldBuildThings.com!


As we’ve seen, one of the most frequently pursued paths for achievement- minded college seniors is to spend several years advancing professionally and getting trained and paid by an investment bank, consulting firm, or law firm. Then, the thought process goes, they can set out to do something else with some exposure and experience under their belts. People are generally not making lifelong commitments to the field in their own minds. They’re “getting some skills” and making some connections before figuring out what they really want to do.I subscribed to a version of this mind-set when I graduated from Brown. In my case, I went to law school thinking I’d practice for a few years (and pay down my law school debt) before lining up another opportunity.

It’s clear why this is such an attractive approach. There are some immensely constructive things about spending several years in professional services after graduating from college. Professional service firms are designed to train large groups of recruits annually, and they do so very successfully. After even just a year or two in a high-level bank or consulting firm, you emerge with a set of skills that can be applied in other contexts (financial modeling in Excel if you’re a financial analyst, PowerPoint and data organization and presentation if you’re a consultant, and editing and issue spotting if you’re a lawyer). This is very appealing to most any recent graduate who may not yet feel equipped with practical skills coming right out of college.

It seems like an incredible set of benefits. How can there be any downside either to the individual or to the economy that a significant proportion of our top graduates are being professionalized as bankers, consultants or lawyers?

The nature of professional services dictates that you work on a deal or a client engagement that lasts a brief period and then ends. You’re usually staffed on a deal that will last for a finite period until the deal either comes through or falls apart. You begin a new transaction or client engagement every several months, perhaps longer if it’s a protracted consulting project. You’re used to relationships measured in weeks or months, or only hours or minutes in the trading context. Clients arrive and demand a flurry of activity until a transaction is complete, then disappear. Senior managers at your firm maintain relationships with clients, but you’re a level or two removed. You often develop strong relationships with colleagues due to the long hours, extensive travel and intense work environment. But you’re used to people coming and going very quickly as teams either shift and change or people leave the firm. For example, the attrition rate at one top consulting firm is 30 percent per year, which is one reason they’re always hiring.

The constant flow of different deals is presented as a selling point by many consulting firms and investment banks. They’ll say it’s “fast-paced,” things are “changing all the time,” and that you’ll work on one deal or project “and then move on.” Most operating companies, in contrast, typically rely upon long-term relationships to function well. They require a significant commitment in which the time frame is measured in years, not weeks or months. Turnover is detrimental to developing a good management team; building a business, and building up the value of one’s equity and relationships within an industry, takes time.

As a professional service provider who is changing clients or transactions every period, it’s hard to become emotionally invested in your work. It’s like trying to be concerned about taking care of a car you’re renting. Your clients are themselves big companies, and your interaction with them will often be limited to the occasional meeting with a senior executive or a manager. If you’re a consultant, you’re generally set up in a conference room from Monday through Thursday in a far-flung city; then you fly home on Thursday night. You’re there as a transaction cost because someone wants to get something done. One ex-consultant I interviewed noted, “It’s hard to get personally attached or invested when you know you’re only there for a number of months. I had assignments and deliverables that I knew would get changed after six months because we were a stopgap solution — I knew my work would disappear in a little while after the new system was put in.”

Your appetite for risk generally diminishes as you get older. This can become even more pronounced in a professional setting. You spend your working life in nice offices around well-compensated people.

You often have support staff from day one. The only people you interact with work at large public companies. Your expenses creep upward over time, and you get used to having nice things. Your interpersonal obligations mount, and the people you’re dating and family members expect you to earn lots of money. As you adapt to your role and circumstance, taking a risk professionally becomes more and more of an abstraction.

Once, while I was having drinks with a friend of mine after she started working at a top-tier consulting firm, she said, “Before I got here, I thought I could do anything. Now, I feel like you can’t do anything unless you have a budget of millions of dollars.”

In the minds of college seniors, and thanks to prodigious investment on the part of the firms themselves, professional services — financial services and management consulting — have become conflated with “business” when really they’re a narrow subset or category of businesses with distinctive features.

If you work in professional services you will be paid handsomely and have a brand-name firm on your résumé. You’ll gain skills, confidence, and exposure. But you may also become heavily socialized and specialized, more risk averse, and accustomed to operating in resource-rich environments with a narrow set of deliverables. You’ll be likely to adopt an arm’s-length relationship with your work. You won’t build anything; instead, you will compartmentalize and put the armor on each day as deals, clients and colleagues come and go.

Professional services are being used as a de facto training ground for our top college graduates — with mixed results for everyone concerned. In particular, going into banking or consulting to learn how to start or run a business is not always ideal; the processes are very different, and give you a sense of companies trying to do different things. It’s like trying to learn how to become a chef by going to a company that runs analyses for large restaurant chains. Yes, you’ll get a better grasp of how chain restaurants work. But will you learn to cook?

There are, of course, any number of successful business builders and entrepreneurs who started out as professionals, as one would expect given that literally half our top graduates have pursued these paths for the past couple decades. David Gilboa worked at an investment bank before co-founding Warby Parker. John Delbridge worked in equity research before co-founding Mimeo. People have long careers that aren’t defined by their first few years.

And it’s easy to get excited about a potential hire if he has spent a couple of years at a top firm. There’s a good chance that this person is smart, motivated, capable of long hours and detail-oriented work, and is looking for a change. If applying to work at a startup, he probably expects a pay cut and has the right motivation.

But if I had a dollar for all the bankers, consultants and lawyers I’ve met who told me that they were “really interested in entrepreneurship,” I’d be awfully rich. Meanwhile, they struggle to transition into different roles, and many of them have lost some of the qualities that would have enabled them to take on their original ambitions.

Their problem isn’t just theirs — it affects all of us. We’re breeding large battalions of indifferent professionals in a handful of cities, when what we need is something very different. We need committed builders.


From SMART PEOPLE SHOULD BUILD THINGS by Andrew Yang. © 2014 Andrew Yang. Reprinted courtesy of HarperBusiness, an imprint of HarperCollins Publishers.

Congrats to our Round 2 Innovation Fund Winners!

We’re thrilled to announce that after six weeks of hustling and fundraising, yesterday marked the close of the VFA Innovation Fund: Round 2! The seven teams of Fellows made an impressive showing, having raised almost $40,000 while vying for the chance to get access to an additional $20,000 in funding for our winners.

As always, we’re blown away and incredibly proud of all of our participating teams. This is yet another example of how motivated and ambitious our Fellows are, and we couldn’t be more excited to help them launch projects in their cities and take their ideas to the next level. Thank you to our friends at American Express OPEN Forum and RocketHub for making it possible!

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First, congratulations to our winner, 2012 Fellow Brian Rudolph, who raised over $17,000 to launch his company, Banza! Greek Pasta. In addition to the money he raised, Brian will get $10,000 from the Innovation Fund to continue to bring his awesome culinary creation to even more people across the country.

Brian, who’s been on the path to becoming an entrepreneur since selling candy out of his locker in middle school, started making Banza! as a gluten-free, high-protein alternative to regular pasta to maintain his healthy lifestyle. (We’ve taste-tested it here at VFA, so you can trust us when we say this stuff is delicious and nutritious!) Thanks to the Innovation Fund and Brian’s hard work getting the word out, he’ll now have over $25,000 to move production out of his own kitchen and get the equipment he needs to grow his business. We have a feeling we’ll be seeing Banza! on supermarket shelves before we know it!

Screen Shot 2014-01-21 at 5.58.01 PMWant more info about Banza! Greek Pasta? You can check out the website and video, and check back for updates on how to order some chickpea pasta of your own!

Runners-up


Second Place:

Bandaloo by 2013 Fellows Kate Leisy and Zubin Teherani
Bandaloo will receive $6,000, in addition to the $12,000+ they raised, to launch the first 48-hour event for local musicians to meet, form bands, meet industry leaders, and perform– all within the same weekend.


Third Place:

CowSciutto by 2013 Fellows Chris Hikel, Anhton Tran, Oliver Li, Jack Farrell, Chelsea Amsley, and Matt Fulton
CowSciutto will receive $4,000 for a total of over $8,000 to help bring their delicious new meat-snack to market!