“If you are a smart kid in the U.S. today, you’re going to do one of six things in one of six places,” says Andrew Yang, founder and CEO of Venture for America. Learning how to build a business is not one of those things, and Cleveland and Detroit are not among the places.
What Mr. Yang means, as he explains in this segment from the Business of Giving, is that today’s top college graduates tend to gravitate toward a handful of fields (financial services, management consulting, the law) in a handful of cities (New York, Washington, Boston, San Francisco). As did he, going from Brown and Columbia to a Wall Street law firm before realizing it was a bad fit and starting a successful career in start-ups.
Now Mr. Yang brings that experience to bear at Venture for America, a nonprofit he seeded with $120,000 of his own money. In this interview he details how Venture works to develop the next generation of entrepreneurs through fellowships and mentoring and shepherd that budding business talent to cities most in need of an economic boost. He also discusses Generation Startup, an upcoming documentary about the organization, and Venture’s goal to create 100,000 new jobs across the country by 2025.
The following is conversation between Andrew Yang, Founder and CEO OF Venture for America, and Denver Frederick, host of The Business of Giving, on AM 970 The Answer in New York City.
Denver: What would you say about a baseball team that was made up entirely of great field and shortstops? Well, you say they need to get some different kinds of players: someone who can hit, maybe a pitcher or two, and some people who can play some other positions in the field. Well, my next guest believes that Team America has too many great field and shortstops. So he has dedicated himself to seeing that some of our best and brightest college graduates become engaged in helping to build enterprises in cities across the United States that could really use their talent. He is Andrew Yang, Founder and CEO of Venture for America. Good evening, Andrew, and welcome to The Business of Giving.
Andrew: Thanks for having me; it’s a pleasure.
Denver: Tell us about Venture for America. What is the central mission and objective of the organization?
Andrew: Venture for America is a nonprofit that recruits and trains top college graduates who want to learn how to build businesses. We train them for a summer, and then we send them to work at early-stage growth companies in Detroit, New Orleans, Baltimore, Cleveland, St. Louis, and other cities around the country that could use an economic boost. Our goals are to help create American jobs through helping early-stage companies grow, and also to train the next generation of entrepreneur.
Denver: Let’s take a look at some of our successful college graduates from some of the very top schools. Is there a default path, Andrew, that they are following– both in terms of careers, and the cities that they gravitate to?
Andrew: Well, I resemble this. When I graduated from college, I didn’t know what to do. So, I went to law school. My parents thought that was a great idea. And then I came to work here in New York as a Wall Street attorney. And to your point, that’s one of the default paths that our top college graduates have today… and one of the top markets. The default paths today are financial services, management consulting, law school, academia to some extent. And our talent tends to concentrate in New York, San Francisco, Washington DC, Boston, and a couple of other cities. One joke we have at Venture for America is: if you are a smart kid in the US today, you’re going to do one of six things, in one of six places.
Andrew: To your point about having a lot of the same sort of player on the field, that’s a pretty apt analogy.
Denver: Yeah. As you’re talking about trying to build and groom these entrepreneurs, I think the words “entrepreneur,” and certainly “social entrepreneur,” weren’t very commonplace a generation or two ago. And I think that today: with the lower barriers to entry, with the internet, and with social media, you can start a business from your dorm room or your home. And we read these stories about these incredible, successful entrepreneurs. I think most people have this assumption that more people are going into entrepreneurship than ever before. Would that be a correct assumption, or not?
Andrew: Well, the statistics tell the opposite story: Rates of business formation among Americans between the ages of 18 and 30 are down about 65%…
Andrew: …over the last 25 years. And if you think about technology, it’s really a double-edged sword. So I’ll give you an example… People think: “Hey! Like now, you can spread the word about your business; you can do all of these things cheaply.” But on the flip side, the internet has taken a lot traditional, small business opportunities and transported them to the cloud, if you will.
One comparison I make is that Kevin Plank –who started Under Armour– which is now a multi-billion dollar company– His first business was selling flowers. Today there is 1-800-FLOWERS and a bevy of online vendors that would make that initial business probably unsuccessful. So, there are a lot of opportunities that have now been taken away.
Technology is also a barrier for many people because a lot of people aren’t coders. I’m going to guess that most of the people listening to this broadcast right now are not coders. So, for all the talk and hype about: “Oh, we need to train engineers and coders…” If you look at the ranks of entrepreneurs, the vast majority are non-technical, non-engineers. There has been a lot of industry consolidation at various levels that makes starting a business today actually more rare than it was 25 years ago.
…if you are a Big League hitter, and you hit 300, you’re excellent… which still means you’re not getting on base 70% of the time.
Denver: Yeah, I guess you have to be better than everybody today, whereas before you just had to be pretty good in your own community. Now, you have to be the best of the best. Do you find that young people have a fear of failure?
Andrew: I think that things have changed, even from the days when I went to school, where you could kind of stumble into certain things. Today, very little happens by accident. So, young people feel like if they fail, they’re not going to get into the good schools. If they go to a good school and they fail, they’re not going to get the good jobs. And so we’re training young people to see failure as a very bad thing. Whereas in entrepreneurship, there’s a lot of failure that is baked in. To continue your baseball comparison, if you are a Big League hitter, and you hit 300, you’re excellent…which still means you’re not getting on base 70% of the time.
Denver: That’s right.
Andrew: That’s a pretty decent comparison to most entrepreneurship and sales that I’ve seen. No one is going to be selling successfully more than 30% of the time, but our young people today would see that as a signal failure in a lot of contexts. So, along with the fact that everyone is an entrepreneur– which is statistically incorrect and overhyped–there’s also this embrace of failure that we talk about in the entrepreneurship community…but we don’t really talk about…because the people that can talk about their failures tend to be successful.
…the way I developed was by working with the more experienced entrepreneur. And that’s what Venture for America does for its fellows. We pair them with existing entrepreneurs. Because if you are an enterprising 22-year old, you’re probably still not situated where starting a company is a good idea.
Denver: That’s exactly right! Sort of a mindset of “Don’t mess up!” That is not the way to go, but that’s the way we have right now. Well, when you started, or thought about starting, Venture for America, it was largely informed by your experience as having been an entrepreneur–the Good, the Bad — and oh yes! — the Ugly. Tell us about that.
Andrew: Well, I went to law school, and I practiced law for about five months here in New York at Davis Polk. And found it was a very bad fit. So, then I went out and tried to start my own company. I know firsthand how hard it is to be an entrepreneur in your 20s. My company had a mini rise and maximum fall; it did not work out. And so then the question I faced was what we’re trying to address with Venture for America, which is: How do you get better? If you are to go to a young person and… let’s say that person said: “I really do want to become an entrepreneur, but I don’t know where to start.” How does that person develop? Right now we’re saying: “Go to school; take out $100K in debt, and that will be a really good path towards your business training.” What I did is work for a more experienced entrepreneur for four years in a healthcare software startup. And then I worked with another entrepreneur who had started an education company that I then became the CEO of.
And so, the way I developed was by working with the more experienced entrepreneur. And that’s what Venture for America does for its fellows. We pair them with existing entrepreneurs. Because if you are an enterprising 22-year old, you’re probably still not situated where starting a company is a good idea. At least, it’s not going be a good idea for your investors or your backers. It might be a good idea for your development! So, what we do is, we say: “Hey, look, if you want to learn this, let’s have you work with the more experienced entrepreneur for two years. Then, at that point, you’ll have a much better shot at it.
Denver: And when you were the CEO of that educational company– which is Manhattan GMAT–you had a lot people coming in from places like Goldman Sachs and Morgan Stanley, who were getting prepared to take that test…and they had dream jobs! But you found out a lot of them weren’t really all that excited about what they were doing.
Andrew: Yeah, they reminded me.. of me at the law firm, where they had done really well in school. They’d gotten the jobs that they knew were really competitive. Then they showed up and were like: “Hey, why I am not that pumped about this? Let me take the GMAT, go to business school, get my $100K in debt, and start over.”
I’ve personally taught the analyst at Goldman, and McKinsey, and Morgan Stanley, and I saw this over and over again. So I thought, “Wow, what a weird, elaborate ringer we’re putting so many of our young smart people through! What would they optimally want to do? And what should we be asking them to do?” And those are some of the questions that I hoped to answer through Venture for America.
Denver: And one of the guys who influenced you was someone by the name of Charlie Crowe. Who is he?
Andrew: So Charlie went to Brown, where I graduated from. We met at an alumni event in Providence. Charlie wanted to be a banker in New York…didn’t get the job he wanted. So, he started a software company in Providence that he’d grown to 100 jobs. And at that time, Providence had an unemployment rate of over 10%. I saw this and said: “My god, Charlie, if you’d gotten that investment banking job, you would have left Providence, and this company would not have existed!” I said out loud to Charlie: “We need more people doing what you did, and less doing what you thought you wanted to do when you were 21 or 22.”
When my company was acquired by The Washington Post in 2009, I thought to myself: How can we create more people like Charlie? That was one of the inspirations for Venture for America.
We’re looking for young people that have demonstrated a capacity to contribute. What we’ve taken that to mean is that they’re really good at something.
Denver: And you decided to start that in May of 2011. You took $120,000 of your own money, and you did some bootstrapping. You went around the country and spoke to kids on college campuses… sometimes as many as two at a time!
Andrew: Yeah, those were good times. So we had this press launch for Venture for America. I did put in $120K of my own to seed the organization. Then I went around calling people I knew and said: “Hey, don’t you love America? Don’t you want to chip in to help start this organization?” We had a couple hundred thousand dollars in commitments– in addition to my own contribution. And then I went around to college campuses, and I asked young people: “How many of you dream about starting a business someday?” They all raised their hands. And then I said: “How many of you are going to go to a bank, consulting firm, or law school to “learn” about business– if you’re going to eventually do this?” All of them kept their hands up.
Denver: Or raised their other hand.
Andrew: Yeah. And then I said: “How many of you would prefer to go work with an existing startup, in an environment that could really use that help… if we could provide you the training, the network, the prestige, the community, the optionality… that you’re currently seeking at a big professional services firm? And all of them kept their hands up. So we said: “Apply to Venture for America. It’s going to be very competitive, but if you get in, we will train you. Then we will send you to work at startups and early-stage companies and cities around the country.”
Denver: Well, let’s talk about how competitive it has become over the course of those five years. How many people apply? What are you looking for in an applicant? And how many are you able to accept?
Andrew: Well, this past year we had about 1,400 applicants from universities around the country for about 170 spots. So, it’s highly selective. We’re looking for young people that have demonstrated a capacity to contribute. What we’ve taken that to mean is that they’re really good at something. It could be that they’re excellent at school; it could be that they started a business; it could be that they’re an exceptional communicator or content creator; it could be that they’re great on the athletic field. We had the co-captain of the Boston College Lacrosse Team join up, and he’s very, very strong, as you’d imagine. So we’re looking for people that have demonstrated an ability to perform at high levels in a given context… that we think will translate.
Denver: Well, they go on this 2-year journey, and much like the military, it begins with boot camp. That’s five weeks during the summer on Brown University campus. You’ve just finished up your program for this year. What goes on there, and what do you hope the recruits will leave with?
Andrew: Well, we bring in firms like McKinsey, IDEO and the Flatiron School–who are best- in- class at what they do. And then we put the fellows in teams of five or six and assign them competitive, time-constrained challenges. They live and work together; they make fast friends. You can only convey so much knowledge in a particular period of time. What we’re trying to do is give them a sense of action orientation, ability to deliver on tight deadlines in teams– that will end up translating to the work environment.
Denver: So you’re going to place them now in some high-growth companies in cities across the United States that don’t attract a lot of people, unlike New York, Los Angeles, Boston and Washington. So let’s start with the cities. Venture for America is currently in what cities?
Andrew: We’re in 17 cities now around the country. We started out in Detroit, New Orleans, Providence, and Cincinnati in 2012. We’ve expanded to another 13 cities. I was just in Birmingham, Alabama last week. So I can rattle through the cities–you can go to our website–but it’s Baltimore, Cleveland, Philadelphia, San Antonio, St. Louis, Pittsburgh, Charlotte. It’s pretty diverse. To your point, we’re looking for a few things: one is that the community needs to have a robust nucleus of promising growth companies and early-stage startups. And then it needs to also not be one of the Tier One markets that are already receiving an influx of talent every year.
Denver: Fair enough. And how do you select the companies? I mean, how do you know what companies are going to be right? And how do you know that a mentor is going to be suitable for one of your VFA fellows?
Andrew: What we do is we spend time in each market. We have a full-time team that meets with executives and CEOs of these startups. We turn down a lot of companies. The measuring stick we use is: Would this be a good development opportunity for a talented and enterprising 22-year old? Then if you go to Baltimore, and you meet with local investors and entrepreneurs, they pass you around very quickly. These communities are very tightly knit. So you can imagine sitting there and visiting various companies. It’s a lot of fun if you like startups, which I do. But you go and meet teams, and then you get a sense as to what would be the right opportunities.
Denver: And cities have been chasing you. I know that Cincinnati, as an example you mentioned before, really almost insisted that you come to town.
Andrew: Yeah. The mayor of Boise reached out a little while ago. We do get outreach now from cities around the country. We’ve also turned down a lot of markets because some of them aren’t really the right fit for us at this stage, or what we can provide. A lot of communities are looking to build their talent infrastructure, if you will, and it’s invigorating to visit these places. I’ve been to a lot of places I’ve never been before and seen what they’re working on… what they’re building. There are leaders in every community that are very easy to root for.
Denver: Well, let’s talk about your young, budding entrepreneurs. They spend two years at this company. You’ve had enough classes by now that you can track what happens to them. How many stay with those companies…move to other cities… become entrepreneurs themselves?
Andrew: It’s been incredibly successful in terms of the outcomes. Right now, about 25% of our alums co-found, or found a business after graduating– which is really astronomically high.
Denver: That really is.
Andrew: Another 40%, or so, stay on as managers and leaders at the companies that they worked for in Venture for America– or another startup in their cities. So those outcomes, we think, are incredible. And the most successful of our alums have started companies that are already valued at millions of dollars and employ dozens of people.
Denver: Yes, and those 25% that start up their own companies… you give them a leg up by providing them some potential access to capital!
Andrew: Well, we’d be a pretty lousy entrepreneurship apprenticeship program if we said: “Hey, you want to start a business? Have at it!” Because the truth is… there’s a mythology that all you need is great determination, passion…
Andrew: One joke I tell is that: if you’re a young person and you don’t know what to do, and you decide to go to law school like I did, your parents will think it’s a great idea. It’s easy to find, and the government will give you a $100,000 loan. If you say: “Hey, I want to start a business!” Parents will think it’s a terrible idea…
Denver: No, they don’t like that at all.
Andrew:… It’s very hard to find, and no one’s gonna give you a $100,000 loan. So it’s no mystery why Business Week projects we’ll have 176,000 unemployed and underemployed law school graduates by 2020. And we will have an equivalent shortage of entrepreneurs around the country. Because we’re systematically incentivizing and encouraging certain things with money.
To your point, we have an accelerator and a seed fund that’s provided this year by UBS to invest in the fellows that want to start businesses. And for every dollar that Venture for America has granted to them directly, they’ve historically gone on to raise $10 from outside investors.
Your brain stays very fluid and plastic through your mid to late 20s. And what young people really respond to are role models. So, when I was with the law firm, I looked around and said: ‘Okay, who am I supposed to be? I’m supposed to be that partner in the corner office.’
Denver: Very impressive. You’ve made the point– which I think was quite funny– that VFA almost provides parental cover for those who want to become entrepreneurs… because nobody wants their kid to become an entrepreneur… They’re afraid the kids are going to live in the house for the rest of their lives. But every parent wants their kid to become a fellow! How can you be against that?
Andrew: It’s a competitive program; you’ll be hanging out with some of the best people in the country. There are incredible companies, and entrepreneurs that are supportive. And so then parents think: “Wow, my kid has a shot!”
Denver: That’s right. And you’ve also made an interesting point about trying to build the business in those very formative years when you get out of college. Talk a little bit about the brain in development, and what it means to really to become an operator and start a business.
Andrew: Your brain stays very fluid and plastic through your mid to late 20s. And what young people really respond to are role models. So, when I was with the law firm, I looked around and said: “Okay, who am I supposed to be? I’m supposed to be that partner in the corner office.” If you pair that young person with an operator and a business owner in Baltimore or Cleveland, they’ll look up and say: “Okay, that’s what I’m supposed to be.” And if you work alongside — and I had this experience — a founder, you see what they’re doing; you see the way they think, the way they operate. Then, it rubs off on you. It rubbed off on me. The goal is to have a systematic way for it rub off on lots and lots of people.
Denver: I know, Andrew, you’ve set a goal or an objective of creating 100,000 new jobs by 2025. I also know we’re in the very early innings, but how are you doing against that goal?
Andrew: We’re about 2,000 jobs in– which I believe is tremendous. And the way you create jobs — I mean, there’s a lot of discussion around this — but the way we at VFA think you create jobs is 1) You help early-stage companies access the talent they need to grow and succeed. And if you ask an entrepreneur what they need, they need one of three things:1) they need money, 2) they need talent, and 3) they need to figure out their product market fit.
If you invested $100,000 in a young business, the first thing they do is look for someone good to hire. And as someone who’s run a business, I know how difficult it is to find the people that you want to hire. So, if we can solve that problem for these businesses, we can really enable them to grow and hire more people. So Part 1 is: you help these businesses access the talent they need to grow and hire more people.
And Part 2 is: you train and cultivate a critical mass of your top graduates to themselves become business builders and job creators. And this is not something that happens quickly; it happens over a period of years. Most businesses will take between 5-10 years to grow meaningfully… and most people will as well. My wife compares what we’re doing to planting seeds… it’s like watching trees grow. I will say, some of our young people have grown into real leaders and founders and CEOs much more quickly than I ever could have hoped.
Denver: Well, to your point: human capital really is a great differentiator– not only between companies, but also between cities. So some cities are doing particularly well, and some cities are just getting by. I think you said once: “What would Detroit be like, if everybody who lived in San Francisco moved to Detroit?” It certainly would be a different city! In these 17 places you are around the country, are any of those mayors doing any intriguing, or even audacious things to bring additional talent to their cities– in addition to VFA?
Andrew: The most proactive mayor I’ve seen is Mayor Duggan in Detroit. He certainly cares very much about talent. They’ve really gone to great lengths to encourage people to take responsibility for not just their own property, but their neighboring properties. He’s cut so much red tape, it’s phenomenal! You can pay a $50 fee in Detroit and then take over an adjacent vacant lot, and do whatever you want with it!
Denver: Getting things done.
Andrew: On the talent side, I think that there are a lot of cities that are trying to do interesting things. I’m actually going to say– I think what young people are attracted to…is other young people. So, in some ways, there are limitations as to what a public official can do. They can create the conditions for young people to find their community attractive, but you really need some degree of critical mass and momentum to build. And those things take time.
Denver: Yes. You’ve written a book, Andrew, with a very apt title: “Smart People Should Build Things.” What’s the central message of that book?
Andrew: The first part of the book is pointing out that smart people, right now, are not really building things.
Denver: And you’ve made that point.
Andrew: Yes. We’re sending the majority of our talent to a professional services layer that serves primarily mature organizations. It’s like a lot of icing… and not baking the cake, so I…
Denver: Good metaphor.
Andrew: …document why and how that’s happening. And lot of it’s happening because certain firms just have more resources to recruit and pay. And now those have become the default paths of achievement to many of our young people. And then we talked about what building things would mean–which is working on these early-stage companies around the country… And that we don’t have enough of our young people taking on that challenge. And the goal is to try and change that. There was a review of the book that was very positive, but said the book could be seen as a promotional vehicle for my organization.
Andrew: Yeah, that was sort of the point. I wrote the book because…”
Denver: Sounds like a successful review. And there are not too many nonprofit organizations, particularly as young as yours, that have a movie coming out! It will be shown in theaters starting September 23; it’s called “Generation Startup.” Tell us about it!
Andrew: This movie is such a labor of love, not by me or the team, but by this incredible woman Cheryl Houser, who I met over two years ago. And she took it upon herself to try and tell the Venture for America story through film. And the movie is coming out later this month. It’s a beautiful film. I have seen it. And what I love about it is that it’s the most honest treatment of entrepreneurship I’ve ever seen. It documents the personal ups and downs, the struggles, and the fact that it doesn’t always work out. One of my missions and passions is to try and debunk some of the mythology around startups and entrepreneurship–where you see it, and it’s like a magic trick. And the truth of it is… the opposite of magic. I mean, it can become magic if someone sticks with it for years, soldiers through, and takes on all of the micro challenges that occur day to day. Anyone who starts a business knows what I’m talking about.
But the film follows six of our young entrepreneurs around Detroit for almost two years. You see them building businesses; you see them trying to succeed in an environment that in some ways is very foreign and difficult for some of them… because many of them are not from Detroit…Now that I think about it, none of them are from Detroit! And “Generation Startup” as a title… to some of our earlier points… It’s not that this generation is more enterprising than past generations. Statistically, it’s actually the opposite. One comparison I make is that a young person might have a social media account. But that doesn’t mean they are starting a business. It’s easy to confuse it. So “Generation Startup,” the title, is more of a call to action; it’s saying: “Hey, this is what it takes to start a business. Here are young people who are taking on that challenge. And then, what does that mean in real life? What does that mean on the ground?”
Denver: There are six very personal stories… Tell us one.
Andrew: So, a couple of guys started a chickpea pasta business in Michigan, called Bonza. And you see the early days of them working on the product in their kitchen. You see them manufacturing it in Michigan in the dead of winter, and then selling it at Eastern Market in Detroit, every weekend on Saturday mornings. So you see their trajectory; you see some of their early pitfalls. That company is called Bonza. The product is very good; my kids like it; it’s high protein, gluten-free pasta. It documents the early days of that business. There’s another really compelling story about a woman named Dextina Booker, who’s an African-American engineer from MIT. She’s actually from the New York area, and she moved to Detroit to work at an investment firm that’s helping revitalize the community. You see some of the personal challenges she grapples with in her new environment as well.
Denver: To learn more about Venture for America, your website would be?
Andrew: Our website is ventureforamerica.org. Again the name of the movie is “Generation Startup.” People tend to find watching the movie trailer more exciting than…
Denver: I did.
Andrew: We’re at ventureforamerica.org. If you, or someone you know, is a talented young person that wants to learn how to build a business, please do apply. We want people from everywhere–all backgrounds, all over the country– to be able to take on the task of revitalizing communities and building businesses.
Denver: Well, Andrew Yang, the founder and CEO of Venture for America… Thank you so much for being on the program this evening. The documentary movie again is “Generation Startup.” It has received sensational advance reviews, and it will open in select theaters around the country on Friday, September 23rd. So, be sure to catch it! And take that seventh grader, or a high school sophomore along with you when you do. It was a real pleasure to have you on the program, Andrew.
Andrew: It is great to be here. Thank you!
The Business of Giving can be heard every Sunday evening between 6 and 7 PM Eastern on AM 970 The Answer in New York and on I Heart Radio. You can follow us at bizofgive on twitter and at facebook.com/businessofgiving.