Introduction
In "Smart People Should Build Things," Andrew Yang presents a compelling case for why the brightest minds in America should focus on entrepreneurship and innovation rather than traditional career paths in professional services. Yang argues that the tendency of top graduates from elite universities to pursue careers in law, finance, and consulting is detrimental to the US economy and stifles innovation. This book explores the reasons behind this trend and offers solutions to redirect talent towards more productive and innovative pursuits.
Yang, an entrepreneur and founder of Venture for America, draws on his personal experiences and extensive research to paint a picture of the current state of career choices among top graduates and the impact these choices have on the economy. He presents a vision for a more entrepreneurial America and provides practical advice for those considering starting their own businesses or joining startups.
The Allure of Professional Services
Why Top Students Choose Predictable Careers
Yang begins by examining why so many graduates from elite universities end up in professional services like law, finance, and consulting. He identifies several key factors:
- High salaries and challenging work environments
- Familiarity with formal application processes
- Peer influence and pressure
- Perceived prestige and career advancement opportunities
The author notes that on average, 40% of Princeton graduates go into finance or consulting, while 13% continue to law school. Similarly, 29% of Harvard's class of 2011 entered finance or consulting, with 19% applying to law school. These statistics highlight the overwhelming trend towards these traditional career paths.
How Professional Service Firms Attract Recruits
Yang delves into the strategies employed by professional service firms to attract top talent:
Significant investment in recruitment: Companies like Goldman Sachs spend an estimated $50,000 per recruit, with some firms even having dedicated spaces in university career services offices.
Marketing of transferable skills: These firms promise to teach valuable skills that can be applied to various fields, making them an attractive starting point for those unsure about their long-term career goals.
Emphasis on high-quality work: Professional service companies stress the importance of delivering sophisticated, error-free work, which appeals to high-achieving students.
Competitive recruitment process: The intense competition for positions at these firms creates a sense of exclusivity and prestige.
The Golden Handcuffs
Yang introduces the concept of "golden handcuffs" to explain why it's difficult for professionals to leave careers in these fields once they've started:
High attrition rates: Despite the initial appeal, many find the work environment challenging, with some top consulting firms experiencing annual attrition rates exceeding 30%.
Lifestyle adjustments: Leaving these high-paying jobs often requires significant changes in lifestyle and financial expectations.
Skill mismatch: The analytical and theoretical skills developed in professional services may not align with the more action-oriented approach required in smaller companies or startups.
Increasing perceived risk: The longer one stays in a professional service role, the harder it becomes to switch career paths.
Limited transferability: Many small and medium-sized companies have different hiring needs and may not value the specific skills developed in professional services.
The Importance of Startups and Innovation
Startups as Economic Growth Engines
Yang shifts focus to highlight the vital role of startups in driving economic growth:
Job creation: A study by the Kauffman Foundation showed that new firms accounted for all net job growth in the United States from 1997 to 2005.
Innovation: Firms with fewer than 500 employees produce thirteen times more patents per employee than larger firms.
Economic value: Unlike some activities in the financial sector, such as share trading, innovations from startups tend to add real value to the economy.
Declining Entrepreneurship in the US
The author presents concerning trends in American entrepreneurship:
Decrease in new businesses: In 1982, companies less than five years old comprised almost half of all US companies. By 2011, this had declined to just over one-third.
Shift towards larger companies: In 2008, for the first time in US history, the majority of workers were employed by companies with 500 or more employees.
Projected surplus of law graduates: Bloomberg Businessweek projected a surplus of 176,000 unemployed or underemployed law school graduates by 2020, highlighting the mismatch between education and job market needs.
Entrepreneurship: Lessons and Strategies
Preparation and Perseverance
Yang offers advice for those considering entrepreneurship:
Thorough preparation: Research your idea, secure a web presence, and build a network of supporters before leaving your full-time job.
Expect challenges: Be prepared for difficulties in funding, product development, and finding quality partners and employees.
Embrace failure: Success often comes after a long period of setbacks and failures. Even seemingly overnight successes like Angry Birds took years of work and multiple attempts.
Nonlinear career paths: Understand that entrepreneurial careers rarely follow a straightforward trajectory.
The Importance of Networks and Location
Yang emphasizes the crucial role of personal connections and geographic location in entrepreneurial success:
Leveraging friendships: Friends can be invaluable sources of funding, employees, and connections. Yang shares his own experience of meeting key supporters for Venture for America through a chance encounter at a conference.
Choosing the right location: Different regions offer unique advantages for specific industries. For example, Cincinnati's military connections benefited a company producing materials for aircraft.
Cost considerations: Locating in less traditional, more affordable cities can provide significant advantages, as demonstrated by successful companies like Zappos (Las Vegas) and Under Armour (Baltimore).
Joining a Promising Startup
For those not ready to start their own company, Yang suggests joining a young, promising startup:
Early impact: Joining a startup in its early stages allows for greater responsibility and the opportunity to make a significant impact on the company's success.
Potential rewards: Early employees of successful startups often reap substantial financial benefits.
Skill development: Working at a startup helps build valuable skills in creating and executing ideas, which are transferable to future entrepreneurial endeavors.
Resilience: The experience gained in a startup environment can help individuals bounce back from setbacks and failures in their careers.
Fostering Entrepreneurship Among Top Graduates
Yang proposes several strategies to encourage more top students to pursue entrepreneurship:
Promoting entrepreneurial role models: Universities, media, and public figures should actively showcase successful entrepreneurs and their stories.
Entrepreneurial mentorship programs: Universities should create rosters of alumni entrepreneurs willing to mentor and advise current students.
Improved entrepreneurship education: Develop more action-oriented, real-world driven programs that continue beyond graduation and result in functioning businesses.
"Entrepreneurial hour" events: Regular sessions featuring experienced entrepreneurs sharing their stories and insights with students.
Emphasizing the impact of entrepreneurship: Highlight the potential for innovation and economic growth that comes from pursuing entrepreneurial careers.
Key Takeaways and Lessons
The importance of innovation: Startups and small businesses are crucial drivers of economic growth and job creation.
The need for diverse career paths: Encouraging top graduates to consider alternatives to traditional professional services can lead to more innovation and economic benefits.
The value of entrepreneurial skills: Even for those who don't start their own companies, developing an entrepreneurial mindset can be beneficial in various career paths.
The power of networks: Personal connections and location play a significant role in entrepreneurial success.
The benefits of joining startups: Working for a young, promising company can provide valuable experience and potential rewards.
The importance of perseverance: Success in entrepreneurship often comes after periods of failure and setbacks.
The need for systemic change: Universities, businesses, and society as a whole must work together to foster a more entrepreneurial culture among top graduates.
Conclusion
"Smart People Should Build Things" presents a compelling argument for redirecting the talents of top graduates towards entrepreneurship and innovation. Andrew Yang's insights into the current state of career choices among elite university graduates and the potential economic impact of these choices are both eye-opening and thought-provoking.
The book serves as a call to action for students, educators, policymakers, and business leaders to reconsider the traditional career paths that have dominated the landscape for decades. By highlighting the importance of startups and small businesses in driving economic growth and innovation, Yang makes a strong case for why smart, talented individuals should consider building things rather than following the well-worn path into professional services.
Yang's practical advice for aspiring entrepreneurs, from preparation and perseverance to leveraging networks and choosing the right location, provides valuable guidance for those considering taking the leap into entrepreneurship. Additionally, his suggestions for fostering a more entrepreneurial spirit among top graduates offer a roadmap for universities and other institutions to encourage innovation and drive economic growth.
Ultimately, "Smart People Should Build Things" challenges readers to think differently about career choices and the impact these decisions have on both individual lives and the broader economy. It encourages a shift in perspective that values creation, innovation, and risk-taking over the perceived safety and prestige of traditional career paths.
As the global economy continues to evolve and face new challenges, the ideas presented in this book become increasingly relevant. By inspiring more of America's top talent to pursue entrepreneurial endeavors, we can unlock new sources of innovation, job creation, and economic growth that will benefit society as a whole.
The book leaves readers with a sense of possibility and excitement about the potential for entrepreneurship to shape a better future. It serves as both a wake-up call to the current state of career choices among top graduates and an inspiring guide for those looking to make a meaningful impact through innovation and entrepreneurship.
In a world where technological advancements and global competition are constantly reshaping industries and economies, the message of "Smart People Should Build Things" resonates strongly. It reminds us that the most valuable resource any nation has is the creativity, drive, and intelligence of its people. By channeling these assets towards building new things, solving problems, and creating value, we can unlock tremendous potential for progress and prosperity.
As readers reflect on the ideas presented in this book, they are challenged to consider their own career paths and the impact they want to have on the world. Whether they choose to start their own ventures, join promising startups, or bring an entrepreneurial mindset to established organizations, the lessons from "Smart People Should Build Things" can help guide them towards more fulfilling and impactful careers.
In the end, Andrew Yang's book is not just about career choices or economic policy – it's about reimagining what's possible when we unleash the full potential of our brightest minds. It's a vision of a more dynamic, innovative, and prosperous future that can be achieved when smart people choose to build things that matter.