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Kindle Notes & Highlights
by
Andrew Yang
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June 19 - June 23, 2023
Ambitious college students have no real idea what to do upon graduation, but they’re trained to seek the “next level.” Many apply to law school, grad school, or even medical school because of a vague notion of status and progress rather than a genuine desire or natural fit. Those who try to do something independently often find themselves frustrated by their lack of rapid advancement, and so default to a more structured path of law school, business school, or graduate school. The concentration in professional services leads our national university graduates to congregate in a handful of
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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.
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
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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.
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.
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.8
We are growing increasingly reliant upon outliers, people who are intrinsically superenterprising and relatively ignorant of economic incentives. And many of the people who would have the most to offer as a founder or inventor simply have other more directly appealing options.
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.
In the startup setting and in most small companies, the output is action-oriented. You’re not an analyst; you’re the operator. You need to get things done and make decisions, often with limited information and resources. You need to hire people, devise and improve a product, get customers and drum up business, market your service and the company, fulfill orders and provide customer service, learn how to manage and lead a team (when they’re not all either analysts or support staff), and allocate what little money you have. For most small companies, the value is in the execution.
Headhunters are eager to place you at another investment bank, consulting firm, or law firm, or perhaps in an in-house position at a large company, but they almost always stick to the same role (it’d be a tougher sell for them to try and help people switch; plus, the commission would be smaller). This is exacerbated by the fact that, for many professionals, engaging in a conventional job search is something they’ve never done; most were recruited directly out of school.
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
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“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.”
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.
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.”4 Another observer commented, “Israelis . . . don’t care about the social price of failure and they develop their projects regardless of the economic . . . situation.”
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.
It was incredibly discouraging; it was harder than anything I’d ever done before. But it also felt genuine. Before this, I’d thought that there were just two inputs for success—smarts and hard work. I began learning that accessing people resources and the world at large was its own separate dimension. I started adapting to my new role and circumstances. I was driven by the thought that Stargiving would eventually turn into a successful company,
There is a common and persistent belief out there that entrepreneurship is about creativity, that it’s about having a great idea. But it’s not, really. Entrepreneurship isn’t about creativity. It’s about organization building—which, in turn, is about people. I sometimes compare starting a business to having a child. You have a moment of profound inspiration, followed by months of thankless hard work and waking up in the middle of the night.* People focus way too much on the inspiration, but, like conception, having a good idea isn’t much of an accomplishment. You need the action and
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the bar is high when you want to start a company. You’ll have the chance to work on something you own and care about from day to day. You’ll be 100 percent engaged and motivated, and doing something you believe in. You can lead an integrated life, as opposed to a compartmentalized one in which you play a role in an office and then try to forget about it when you get home. You can define an organization, not the other way around.
From a value creation standpoint, it’s not ideal for a massive level of talent to be going to existing enterprises that have captured large economic rents or where people are fighting for a set of finite slots. The rents and slots will stay essentially constant. Contrast this with new business formation. If I were to say, “There are only going to be 682 new successful businesses started in the United States next year,” people would instantly regard that as ridiculous. It’s unknown and unknowable. But we all know that if another enterprising team comes along and starts a cool company, that
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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.
Reid Hoffman, the founder of LinkedIn, and others have pointed out, remarkable careers are unlikely to advance in a straightforward, linear fashion.1 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
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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.
Leadership matters. We have to show our young people what is possible and support their training and development in those directions. Why would we make it so easy to become what we don’t need while making it so hard to become that which we need most? We have to make it as easy and obvious to be an entrepreneur or team member at an early-stage growth company as it presently is to become a lawyer, banker, doctor, or consultant. We should invest in giving rise to a set of builders who will address the needs of our age.
Include a path and values discussion in college and embrace the co-op or gap year. At many schools and universities, the first time students hear anyone talking about what they should do with their lives is during their commencement speech on graduation day.
Entrepreneurship course work should consist of actions undertaken for real organizations and should involve real money and selling things. Entrepreneurship programs should be producing real businesses and contributors each year, if only on a small scale. Most business building is not about a clever idea but about high-level and consistent execution.
Kevin Plank of Under Armour is a prominent example of an entrepreneur who has done an outstanding job giving back in order to inspire others; Kevin has funded and mentored numerous entrepreneurs in addition to founding and leading a Fortune 1000 apparel company in Baltimore. Dan Gilbert, Tony Hsieh, Steve and Jean Case, Josh Kopelman, Arianna Huffington, and other entrepreneurs—many less famous—are cut from the same cloth in that they give their time and resources to cultivate the next generation.
we need to provide a direct, concrete, and actionable path that motivated graduates can take to learn and develop what it takes to build and grow a value-creating business. Entrepreneurship is like most things—you tend to get better at it over time. The toughest part is getting started. We have to make it easier to get started as a builder.
Imagine a country where the same body of talent that is currently heading to Wall Street and professional services was instead going to startups and growth companies around the country. How long would that take to impact the rate of job growth and innovation? We can transform the economy and renew our culture to include value creation, risk and reward, and the common good. We can prepare a critical mass of our best and brightest to become a network of builders and job creators.
The Dalai Lama, when asked what surprised him most about humanity, wisely responded, “Man, because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.” This quote changed my life.
only aspire to lead a meaningful, impactful life where I can apply my skills as an extremely analytical individual toward the benefit of humanity. I’m constantly in awe of what we have achieved as a species, but I’m also fully aware that there are plenty of problems left to tackle from government, to education, to corporate America. I only hope I get the opportunity to work toward solutions for these problems.
