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One of the central missions of Venture for America is to make it easier for top college graduates to work for start-ups and early stage companies throughout the country.
At present, banks and consulting firms have (to their credit) built very successful recruitment infrastructures to draw in hundreds of top graduates each year. This in turn has made it more difficult for smaller, emerging organizations to compete for talent.
Here are two passages that illustrate the recruitment and acculturation process.
1. The first is from James Kwak, an author who graduated from Harvard and later worked at McKinsey and Company, a top consulting firm, before attending law school:
When I graduated from college, I had no interest in investment banking or its close cousin, management consulting. But I went to McKinsey for reasons that were only slightly different than those of the typical Ivy League undergrad; after getting a Ph.D. in history, I discovered that I was unlikely to get a good academic job and was pretty much unqualified for anything else, and McKinsey was one of the few places that would hire me into a “good” job with no discernible qualifications (other than academic pedigree). Now that I’m at Yale Law School, where maybe 15% of students (my wild guess) come in wanting to be corporate lawyers but 75% end up at corporate law firms (first job after law school, not counting clerkships), I’m seeing it again.
The typical Harvard undergraduate is someone who: (a) is very good at school; (b) has been very successful by conventional standards for his entire life; (c) has little or no experience of the “real world” outside of school or school-like settings; (d) feels either the ambition or the duty to have a positive impact on the world (not well defined); and (e) is driven more by fear of not being a success than by a concrete desire to do anything in particular. (Yes, I know this is a stereotype; that’s why I said “typical.”) Their (our) decisions are motivated by two main decision rules: (1) close down as few options as possible; and (2) only do things that increase the possibility of future overachievement. Money is far down the list; at this point in their lives, if you asked them, many of these people would probably say that they only need to be middle or upper-middle class, and assume that they will be.
The recruiting processes of Wall Street firms (and consulting firms, and corporate law firms) exploit these (faulty) decision rules perfectly. The primary selling point of Goldman Sachs or McKinsey is that it leaves open the possibility of future greatness. The main pitch is, “Do this for two years, and afterward you can do anything (like be treasury secretary).” The idea is that you will get some kind of generic business training that equips you to do anything (this in a society that assumes the private sector can do no wrong and the public sector can do no right), and that you will get the resume credentials and connections you need to go on and do whatever you want. And to some extent it’s true, because these names look good on your resume, and very few potential future employers will wonder why you decided to go there. (Whether the training is good for much other than being a banker or a consultant is another question.)
The second selling point is that they make it easy. Yes, there is competition for jobs at these firms. But the process is easy. They come to campus and hold receptions with open bars. They tell you when and how to apply. They provide interview coaching. They have nice people who went to your school bond with you over the recruiting period. If you get an offer, they find out what your other options are and have partners call you to explain that those are great options, but Goldman/McKinsey is better, and you can do that other thing later, anyway. For people who don’t know how to get a job in the open economy, and who have ended each phase of their lives by taking the test to do the most prestigious thing possible in the next phase, all of this comes naturally. (Graduate schools, which also have well-defined recruiting processes, are the other big path to take.) The fact that most companies don’t want new college graduates makes it easier to go to one of the few that do.
The third selling point — not the top one, but it’s there — is the money. Or, more accurately, the lifestyle. The glossy brochures never say how much money you can make. But they make it clear that you will be part of the well-dressed, well-fed, jet-setting elite. When people walk into those offices, with fresh flowers and all-glass walls and free food and modern technology everywhere, they get seduced. Last summer one person wrote to my school’s email list about how wonderful his office was, with its view of Central Park. I mentioned this to an old friend who used to work at McKinsey, and he said, “he fell for the office.”
The same factors are also largely true for top law school graduates, although for them the money is understandably more important. Law school costs close to $200,000 for three years, and I believe the average graduate has about $100,000 in debt. So another major inducement is the idea that you will work at a corporate law firm for three or four years, pay off your debt, and then go work for legal aid or the U.S. attorney’s office.
But the other factors are also very important. If you go to a top law school, it is simply easier to get a corporate firm job than any other job. They all come to campus at the beginning of your second year, most people can get a job simply by following the interview process, you work there for one summer, and then you get an offer to come back. Even if you don’t want to work at a firm, it makes rational sense to do it for that summer to get the offer as Plan B.
By contrast, it’s hard to get a public interest job. Most public interest organizations don’t have the money to hire a lot of people, and many don’t want people right out of law school. So the usual route is you have to apply for a competitive fellowship to work at a public interest organization, and then you have to hope they’ll hire you for good after that year. It’s hard. And that’s how Plan B becomes Plan A. And besides, many prominent corporate lawyers have gone on to important positions in Washington, so there is still the possibility of future greatness.
And once you’re in the door, the seduction begins. . .
It’s just human nature. Your expenses grow to match your income. As the decades pass and you realize that no, you’re not going to save the world, the money becomes a more and more important part of the justification. And when you have kids, you’re stuck; it’s much easier to deprive yourself of money (and what it buys) than to deprive your children of money.
More importantly, you internalize the rationalizations for the work you are doing. It’s easier to think that underwriting new debt offerings really is saving the world than to think that you are underwriting new debt offerings, because of the money, instead of saving the world. And this goes for many walks of life. It’s easier for college professors to think that, by training the next generation of young minds (or, even more improbably, writing papers on esoteric subjects), they are changing the world than to think that they are teaching and researching instead of changing the world.
Sure, there are self-parodying, economically delusional, psychotherapy-needing, despicable people on Wall Street . . . But there are also a lot of people who went there because it was easy and stayed because they decided they couldn’t afford not to and talked themselves into it.
A college student asked me at a book talk what I thought about undergraduates who go work on Wall Street. And individually, I have nothing against them, although I do think they should do their best to keep their expenses down so they will be able to switch careers later. But as a system, it’s a bad thing that a small handful of highly profitable firms are able to invest those profits into skimming off some of the top students at American universities — universities that, even if nominally private, are partially funded by taxpayer money in the form of research grants and federal subsidies for student loans –and absorbing them into the banking-consulting-lawyering Borg . . .
2. The second account is an interview with a Harvard grad who’d gone to Wall Street by Ezra Klein of the Washington Post.
What did you study at Harvard?
I focused on history and government and political philosophy.
And why did Goldman Sachs think that would be good training for investment banking?
Why Goldman thought I’d be good for investment banking is a very fair question. There are a lot of Harvard people at Goldman and they’ve put a lot of effort into recruiting from the school. They really try to attract liberal arts backgrounds. They say this stuff isn’t so complicated, that you’ll pick it up as you go along, that it’s all about teamwork, that they have training programs. That being said, it would be very hard to get a full-time job there without a previous summer internship.
How did you end up going to Goldman, though? Presumably, as a social sciences major, you hadn’t meant to head into the financial sector.
Investment banking was never something I thought I wanted to do. But the recruiting culture at Harvard is extremely powerful. In the midst of anxiety and trying to find a job at the end of college, the recruiters are really in your face, and they make it very easy. One thing is the internship program. It’s your junior year, it’s January or February, and you interview for internships. If all goes well, it’s sort of a summer-long interview. And if that goes well, you have an offer by September of your senior year, and that’s very appealing. It makes your senior year more relaxed, you can focus on your thesis, you can drink more. You just don’t have to worry about getting a job.
And separate from that, I think it’s about squelching anxiety in general. It checks the job box. And it’s a low-risk opportunity. It’s a two-year program with a great salary and the promise to get these skills that should be able to transfer to a variety of other areas. The idea is that once you pass the test at Goldman, you can do anything. You learn Excel, you learn valuation, you learn how to survive intense hours and a high-pressure environment. So it seems like a good way to launch your career. That’s very appealing for those of us at Harvard who were not in pre-professional majors.
The impression of the Ivy-to-Wall Street pipeline is that it’s all about the money. You’re saying that it’s actually more that Wall Street has constructed a very intelligent recruiting program that speaks to the anxieties of the students and makes them an offer that there’s almost no reason to refuse.
Exactly. I wouldn’t speak for everyone and there certainly are people who want to be in finance, but a large portion are intrigued by these jobs for those reasons. I think that’s a majority, at least at Harvard. And the same goes for consulting jobs . . . It’s this limited-time commitment, the ability to get new skills. These aren’t the types of things you grow up dreaming of doing, but you wear a business suit, you meet clients. It’s a way of growing up very quickly. And investment banking has the added advantage that you can make money very quickly and afford a great apartment in New York, which is very expensive.
Does that trap people? It’s common to talk about “golden handcuffs” in law, where people go to law school and want to do public interest law but decide they’ll go to a corporate firm for a few years first. Then they get used to the lifestyle the corporate money provides and never really give it up.
The law comparison is a good one. That’s the risk of it. As you said, when people leave law school with a lot of debt, they figure they’ll get some good skills and good money at a top-tier firm before going to save the world. But then you have a great apartment, more responsibilities, kids . . .
And I think it’s important to point out, that things happen very quickly. Private equity firms were trying to recruit us in the first year of my two-year training program. There’s this notion of the accidental banker, people who get caught up in that world and get more and more pay and find it harder to justify leaving. But the cultural effect of all of this — and even with regulatory reform, we need to think about that — is that a lot of people decide to sacrifice much more time than they normally would because the money is so good, and then they believe they deserve extremely high pay because they’re giving up so much time. It’s not malicious. But there are a lot of unhappy people who end up in that situation . . .
The above accounts illustrate how high-resource organizations invest heavily in recruiting top college graduates and convert specific paths into the most clearly identified options. We have to make working for a start-up in one of our communities just as attractive and easily accessible if we want to change the flow of talent.