Smart People Should Build Things

Andrew Yang

• Publisher: Harper Business
• Year: 2014
• ISBN:
  9780062292056
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Andrew Yang, the founder of Venture for America, offers a unique solution to our country's economic and social problems—our smart people should be building things. Smart People Should Build Things offers a stark picture of the current culture and a revolutionary model that will redirect a generation of ambitious young people to the critical job of innovating and building new businesses.

As the Founder and CEO of Venture for America, Andrew Yang places top college graduates in start-ups for two years in emerging U.S. cities to generate job growth and train the next generation of entrepreneurs. He knows firsthand how our current view of education is broken. Many college graduates aspire to finance, consulting, law school, grad school, or medical school out of a vague desire for additional status and progress rather than from a genuine passion or fit.

In Smart People Should Build Things, this self-described "recovering lawyer" and entrepreneur weaves together a compelling narrative of success stories (including his own), offering observations about the flow of talent in the United States and explanations of why current trends are leading to economic distress and cultural decline. He also presents recommendations for both policy makers and job seekers to make entrepreneurship more realistic and achievable.

PART ONE

Where Our Talent Is Going

1

The Prestige Pathways

If you graduate from a national university, there’s a very good chance that you’re going to become a banker, lawyer, consultant, or doctor, and the odds are high that you’re going to pursue one of these professions in New York, Boston, San Francisco, Los Angeles, Chicago, or Washington, DC, regardless of where you originally grew up.

Why is that?

It’s because achievers want to achieve, and that’s what achievement now looks like.

I’m an example. I was not a particularly motivated or passionate young person, unless you consider playing lots of Dungeons and Dragons in the suburbs of New York City to be a cue for future entrepreneurship. As a kid, my parents told me that my job was to get into a good college, which involved getting good grades, playing piano at a competitive level, and playing tennis well enough to make my mediocre high school team.

When I was twelve, they started sending me to an academic summer camp run by Johns Hopkins University. “Nerd camp,” we called it, though its official name was the Center for (Academically) Talented Youth (CTY). I took the SAT as a preteen to qualify. I loved CTY—it was the home of my awkward first kiss and my first girlfriend, where weeks seemed to last for entire seasons.

When I was fourteen, one of my summer camp mates, Lucy, mentioned that she went to a prep school in New England called Exeter and liked it. I pitched going there to my parents. I was kind of coasting at my public school, halfheartedly doing well enough to maintain my general profile as the smart kid but not really pushing too hard.

My parents were thrilled with the idea, and I headed off to Phillips Exeter Academy when I was fifteen. It was a phenomenal place to get an education; I appreciate it a great deal now that I’ve had time to reflect on all that I gained from my time there. But it’s not an easy environment. As one example, postgraduates were recruited to play every major sport at the school to make the teams supercompetitive, so a lot of young people were forced to reassess their identities because they could no longer make a team. In my teenage mind, going to Exeter was largely about getting into college. My most significant extracurricular activity was being a member of the debate team. I performed well at a New England prep school debate and was named to the US national team. We went to the world championships in London, where I promptly got blown out of the water by anyone with a British accent.

I got into Stanford and Brown, and after visiting both schools, decided to go to Brown. Stanford seemed way too nice and pleasant in terms of climate and architecture—I had a hard time imagining myself or anyone working particularly hard there, probably because I’d been conditioned by harsh northeastern winters. Also, my family lived on the East Coast, and it was appealing to be close to them. I showed up at Brown planning on getting a degree in English, but after a semester of reading Moll Flanders I switched to economics and political science.

My parents did a great job of conditioning my brother and me to be conscious of money. I was on a partial scholarship to Brown that was provided by IBM, but I felt the pressure. My parents were always doing things like sucking marrow out of bones and eating fish heads, and reminding me how they’d mortgaged the house to cover my tuition. I got an on-campus job as a snack bar worker making six dollars per hour and was promoted to supervisor after a semester. I’d worked part-time at the library while at Exeter, and thus took for granted that I should have a job all of the time.

My spare time at Brown was spent working out, training at tae kwon do (I maxed out below the black belt level; I wasn’t terribly good at it), and playing video games. On the way to one tae kwon do competition at Cornell, my cologne spilled onto my uniform (why pack cologne for a martial arts tournament?), and I walked around reeking of Claiborne for Men all weekend. My teammates noticed, and started saying things like, “He smells too sexy to hit!” Unfortunately, my opponents disagreed.

Probably my proudest achievement in college was that I could bench-press 225 pounds eight times in a row. I named my pectorals Lex and Rex, and could jostle them on command to make them “talk.” I was also one of a handful of top Street Fighter II players on campus, and could even compete credibly with Balrog and other marginal characters.

If the above description makes me sound like a fairly unremarkable student at Brown, that’s about right. I did well in my economics courses but didn’t excel in any serious-minded way. I spent my summers returning to CTY as a resident adviser, which was a fun job. I also worked as a busboy at a Chinese restaurant in Westchester County, New York, for a couple of summers, but my written Chinese was too cruddy to translate orders to the chefs, and the fact that I spoke English well really confused the patrons. At the end of the night, all of the other workers would get into a minibus and head to New York City’s Chinatown while I got into my parents’ Honda Accord and drove home.

Around junior year, I began thinking about going to law school. It wasn’t a terribly sophisticated process. Thanks to my family’s emphasis on education, I always assumed I’d go on to some kind of additional schooling. I wanted to become a smart, successful guy, and law school seemed like a good way to go. I took the LSAT and got a 178, which further made it seem like the thing to do. The end of my undergraduate career was uneventful. I took my senior spring courses on a pass/fail basis, and spent most of my senior year moping about my ex-girlfriend, who’d left me while I had studied abroad in Hong Kong the previous year.

I headed off to Columbia Law School a few months after graduation. I took out student loans to pay for it—about $40,000 per year. I kept my head down and tried to do well. I wound up on the Law Review, and got offered jobs by each of the top firms in New York as a second-year student. I took a job at Davis Polk and Wardwell after graduating because it seemed to have more of a humanist environment than the others, and I started working in the banking and mergers and acquisitions departments. I was twenty-four years old, making $125,000 a year plus an annual bonus of about $15,000. I owed $110,000 in law school debt, despite working both summers and part-time during my third year of law school being overpaid by the firm to perform research tasks.

As you can see, there’s not much to indicate anything unconventional up to this point. It wasn’t until I got to the law firm that things started hitting me. First, the people around me seemed pretty unhappy. You can go to any corporate law firm and see dozens of people whose satisfaction with their jobs is below average.

The work was entirely uninspiring. We were for the most part grease on a wheel, helping shepherd transactions along; it was detail-intensive and often quite dull. Only years later did I realize what our economic purpose was: if a transaction was large enough, you had to pay a team of people to pore over documents into the wee hours to make sure nothing went wrong.

I had zero attachment to my clients—not unusual, given that I was the last rung down on the ladder, and most of the time I only had a faint idea of who my clients were. Someone above me at the firm would give me a task, and I’d do it.

I also kind of thought that being a corporate lawyer would help me with the ladies. Not so much, just so you know.

It was true that I was getting paid a lot for a twenty-four-year-old with almost no experience. I made more than my father, who has a PhD in physics and had generated dozens of patents for IBM over the years. It seemed kind of ridiculous to me; what the heck had I done to deserve that kind of money? As you can tell, not a whole lot. That didn’t keep my colleagues from pitching a fit if the lawyers across the street were making one dollar more than we were.

Most worrisome of all, my brain started to rewire itself after only the first few months. I was adapting. I started spotting issues in offering memoranda. My ten-thousand-yard unblinking document review stare got better and better. Holy cow, I thought—if I don’t leave soon, I’m going to become good at this and wind up doing it for a long time.

My experience is a tiny data point in a much bigger problem.

Let’s imagine a very large company. It is a leader in its industry and much admired by its peers. It invests a tremendous amount of money—literally billions of dollars a year—in identifying, screening, and training its many employees. Those employees who are considered to have high potential are sent to special training programs at substantial additional cost. Happily, these top training programs are considered to be among the best in the world.

After these employees complete their training, the company encourages them to choose for themselves the division in which they’d like to work. Employee preferences are deemed to be the most efficient way of deciding who works where. This seems like a good system, and it works well for a long time. However, perhaps predictably, many of its most highly rated employees eventually become drawn to the finance and legal divisions because these divisions have very effective recruitment arms, are more visible, pay better, and are thought of as providing a more intellectual level of work. Over time, proportionally fewer of the top recruits go toward the management of the company or the company’s operations. The company’s basic training division is considered a backwater, with low pay and low recognition. And only a relative handful of employees go toward research and development or the launching of any new products.

Take a second to think about the company described above. What do you think will happen to this company as time passes? And if you think that it’s not set on a path to success, what would you do to fix it? This company reflects, in essence, the economy of the United States of America.

If you are a smart college student and you want to become a lawyer and go to law school, what you must do has been well established. You must go to a good school, get good grades (already accomplished, for many), and take the LSAT (a four-hour skill test). There is no anxiety in divining the requirements, as they are clearly spelled out. Most undergrads, even those with little interest in law school, know what it takes to get in. The path location costs are low.

The same is true if you want to become a doctor. Becoming a doctor is hard, right? Sort of. It is arduous and time-consuming, but it is not hard if you have certain academic abilities. You must take a battery of college courses (organic chemistry being the most infamous and rigorous of them) and do well, study for the MCAT (an eight-hour exam), and spend a summer or even a year caddying for a researcher, doctor, or hospital. These are time-consuming hoop-jumping tasks, to be sure, but anyone with a very high level of academic aptitude can complete them.

If you attend an Ivy League university or similar national institution, legions of suit-wearing representatives from the big-name investment banks and consulting firms will show up at your campus and conduct first-round interviews to fill their ranks each year, even in a down period (as with the recent years following the financial crisis). They will spend millions of dollars enlisting interns and educating the market annually. Most freshmen have no idea what management consulting is, yet seniors can rattle off the distinctions of different firms with little difficulty. All undergraduates have friends in the classes above them who have gone through this process and gained analyst or associate positions at major investment banks and consulting firms. Again, the requirements are clear: you have to have good grades, be able to perform some cognitive tasks with words and numbers in the form of case studies that you should prepare for and practice, and hopefully look good in a suit. It is also very helpful if you spend a summer in college doing something that can be presented as relating to your professional interest; in many cases it’s necessary that you intern at the employer the summer before your senior year in order to get an offer. Summer internships have become vital for getting jobs in the most selective firms, so the process begins quite early—junior year at the latest. This path requires some early choices, but you don’t have to spend time taking another standardized test. Of course, many of the people who go into finance and consulting take the GMAT and go on to business school.

These structured paths are clearly laid out, and are pursued collectively by many—or most—of the students who have been screened and sorted as the academic and cognitive elite. These “prestige pathways” have become the default options. In 2011, 29 percent of employed Harvard graduates went into finance or consulting, while 19 percent of the class applied to law school and 18 percent applied to medical school.1 That’s a majority of the class. California (San Francisco), New York (New York City), and Massachusetts (Boston) were the only states that received over one hundred Harvard grads in 2012, with Illinois (Chicago) and Washington, DC, being the only other destinations to receive fifty or more.2 The statistics from Yale, Dartmouth, Penn, and other top schools are similar.

Perhaps this is somewhat surprising—wouldn’t college students at these top schools be positioned to blaze their own trails and pursue less conventional routes with the access that they have been given?

Unfortunately, hardworking, academically gifted young people are kind of lazy when it comes to determining direction. If you give them a hoop to jump through, jumping through that hoop can take two, twenty, or two hundred hours, and it won’t make a big difference. But they are quite lazy when it comes to figuring out what path to take or—more profoundly—building their own path. They’re trained to get the grade or ace the application. That is what has made them successful in most every conventional respect each step of the way up to their senior year in college, at the point that this process is well under way.

“It’s doing a process that you’ve done a billion times before,” explains Dylan Matthews, a 2012 Harvard graduate who wrote for the campus newspaper, the Harvard Crimson, before becoming a journalist. He adds,

Everyone who goes to Harvard went hard on the college application process. Applying to Wall Street is much closer to that than applying anywhere else is. There are a handful of firms you really care about, they all have formal application processes that they walk you through, there’s a season when it all happens, all of them come to you and interview you where you live. Harvard students are really good at formal processes like that, and they’re less good at going on Monster or Craigslist and sorting through thousands of job listings from thousands of companies whose reputations they don’t know. Wall Street and consulting (and Teach for America, too) turn applying to jobs into applying to college [again], more or less.3

Of course, the same procedural comfort level applies to law school and other graduate programs, and the same mind-set pervades competitive campuses around the count...