Smart People Should Build Things

“What could make a bigger impact on our economy: another lawyer in a corner office or an entrepreneur building the next big innovation?”

1. The Allure of Predictable Careers

Elite university graduates overwhelmingly enter professional service industries like law and finance. This trend is driven by students’ desire for well-paying, stable, and respectable jobs. For example, about 40% of Princeton graduates opt for careers in finance or consulting. The application processes for these companies resemble elite universities’ admissions, which students are already conditioned to excel at. The familiarity makes these jobs seem like the natural next step. Additionally, peer influence nudges students onto these paths. Observing classmates striving for high-profile jobs reinforces these ambitions. A testimonial from one graduate noted how constant references to banking interviews shaped their direction.

Examples

• Princeton: 40% of graduates heading to consulting or finance.
• Harvard: Almost 29% of the class of 2011 pursued finance.
• Student: A peer’s choices can influence career paths significantly.

2. The Hidden Recruitment Efforts of Professional Firms

Professional service firms don’t just count on a reputation of prestige; they actively seek out top talent with intense recruiting strategies. By heavily investing in attracting students, firms create an environment where joining them seems appealing, even inevitable. Goldman Sachs reportedly spends about $50,000 per recruit and maintains a dedicated room at Columbia University’s career services. Such investments highlight the extent to which firms compete for small pools of talent. Marketing efforts also play a role. These companies frame their roles as stepping stones for any future career, making students believe two years there will set them up for life.

Examples

• Goldman Sachs: $50,000 spent per hire.
• Columbia: Dedicated Goldman Sachs recruitment space.
• Promises: Firms claim their training opens doors to lucrative fields like investment banking.

3. The Trap of Golden Handcuffs

Although these jobs are prestigious, leaving them is challenging due to financial dependencies and lifestyle expectations. Workers face astronomical pressures formed by the high salaries and perks they grow accustomed to, creating what’s called "golden handcuffs." Many experience burnout due to the demanding environment of top firms, with some organizations showing over 30% annual attrition rates. Quitting rarely leads directly to smaller, fulfilling roles, as such companies prize operational results rather than big-name credentials. Also, smaller enterprises often need only one finance expert, not a team of twelve. This makes it hard for professionals to transition to startups.

Examples

• Attrition: A 30% yearly exit-rate in consulting.
• Risk aversion: Professionals fear reduced salaries and lifestyle changes.
• Fit gap: Startups value getting things done over brand-name résumés.

4. Start-ups Power Economic Growth

Small businesses, not big corporations, drive much of the U.S. economy. From job creation to innovation, start-ups make a difference that professional service firms cannot. For instance, research from the Kauffman Foundation points out that all net job growth from 1997 to 2005 was attributed to new firms. Furthermore, businesses with fewer than 500 employees generate 13 times more patents than larger companies. In contrast, many large financial firms, such as Goldman Sachs, contribute much less to broader economic prosperity, instead profiting mainly from trading activities that come at a cost to other sectors.

Examples

• Kauffman study: Start-ups account for all net job growth between 1997–2005.
• Patents: Small companies produce 13X more per employee than big firms.
• 1982 vs. 2011: The share of young companies dropped significantly in the U.S.

5. Preparation and Perseverance Make Entrepreneurs

Entrepreneurship requires groundwork and patience. It involves far more struggle than success initially, much like having a child. First, aspiring founders should research their market, competitors, and prospective audience thoroughly. Establishing a basic online presence such as a website can create momentum. Engaging friends and mentors to join as partners or offer feedback helps build a support system. Despite preparation, hurdles like funding or slow product progress will arise. Rovio, the creator of Angry Birds, spent six years and faced layoffs before its breakthrough success.

Examples

• Research: Know your competition, customer base, and market gaps.
• Challenges: Expect product development to take double the time planned.
• Rovio: Success after years of initial struggles.

6. Networking is More Important Than Going It Alone

Entrepreneurship thrives on building connections. The right networks can lead entrepreneurs to advisors, partners, or investors who share their vision. For instance, Andrew Yang attended an Economist conference when a friend gifted him a pass. There, he met Tony Hsieh (Zappos CEO) and Jeff Weiner (LinkedIn CEO). This meeting led to Hsieh investing $1 million in Yang's Venture for America initiative. Location also plays a role in networking. Cities like Cincinnati benefit start-ups like General Nano by offering access to specific industries, like aerospace and military contracts.

Examples

• Tony Hsieh: Brought financial support to Venture for America.
• General Nano: Leveraged Cincinnati's military connections.
• Steve Jobs and Steve Wozniak: Apple began with a collaboration.

7. Joining Start-ups Before They Boom

Being part of a fledgling company offers immense growth opportunities. Founders and early employees often define a company’s future and reap the financial benefits. Take the rise of Google. Its early hires likely gained invaluable expertise, while financially benefiting from the company’s immense success. Chobani, another example, began by purchasing a shuttered yogurt factory and is now a billion-dollar business with over 1,000 employees. Early team members played critical roles in its meteoric rise.

Examples

• Google: Early employees shaped its growth and profited.
• Chobani: Began from an abandoned facility and turned into an empire.
• Professional resilience: Start-up employees bounce back better than those in professional services.

8. Promoting Role Models and Mentors in Entrepreneurship

Inspiring students to become entrepreneurs relies on presenting them with the right role models. Builders, creators, and founders should have platforms across universities to share their stories. Programs like the University of Michigan’s “entrepreneurial hour” invite successful founders to engage with and inspire students. Meanwhile, initiatives like the Yale Entrepreneurial Institute connect students with experienced alumni for mentorship. Storytelling and guidance reduce barriers to entry for careers in start-ups, showing students what is achievable when supported.

Examples

• University of Michigan: Weekly entrepreneurial speaker series.
• Yale Entrepreneurial Institute: Pairs students with alumni mentors.
• Public figures: Entrepreneurs sharing personal journeys inspire action.

9. Making Entrepreneurial Education Hands-On

Current education often separates theory from real-world results. A better approach would be action-driven programs tied to building actual businesses during college. Entrepreneurship courses should transition from classroom learning to real-life execution, showing students practical steps to start and sustain a company. This learning-by-doing concept exists within initiatives like Venture for America, which pairs graduates with start-ups, or localized incubator programs providing resources.

Examples

• Action focus: Transition students from abstract discussions to real-world ventures.
• Venture for America: Puts graduates in start-up settings for hands-on learning.
• Incubators: Provide seed funding and space for ideas to grow in practice.

Takeaways

1. Explore small start-ups early in your career where you can make a direct impact and gain unique growth opportunities.
2. Build a network for support and resources; focus on attending industry events and connecting with mentors.
3. Begin your entrepreneurial venture with thorough preparation by researching markets, creating online presences, and gathering a team.