Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

The Qualities We Need.  

A friend told me about a young Princeton graduate she knew named Cole. Cole studied mathematics and went to work for a hedge fund directly out of school. He’s now making well into six figures at the age of twenty-four. That’s his whole story to date.

That’s success and the American way. And yet how excited are you about Cole’s trajectory? Think about it for a second. I’ll admit that I’m not too psyched about it, even though I have friends at hedge funds who are very intelligent, stand-up guys and even philanthropists, and I know that hedge funds are positive in that they provide diversified investment opportunities to large pools of capital.

My lack of enthusiasm comes down to a few things. If Cole successfully analyzes an opportunity for the hedge fund and it invests slightly more effectively, that will be a win for the fund’s managers and its investors. But there will very likely be an equivalent loss on the other side of the investment (whoever sold it to them makes out slightly less well for having undervalued the asset). It’s not clear what the macroeconomic benefit is, unless you either favor the hedge fund’s investors over others or have a very abstract view toward capital markets working efficiently.

Cole is almost certainly very smart. But what has he done to merit his almost immediately elevated stature in life? He’s never hazarded anything. He hasn’t demonstrated any outstanding character or virtue, unless you consider studying math and being really smart intrinsically virtuous. He’s never had to go against the grain or go out on a limb. His rewards seem a little bit exaggerated for his accomplishments.
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Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

Entrepreneurship Isn’t About Creativity.  

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 follow-through, which involves the right people, know-how, money, resources, and years of hard work.

I learned this the hard way. Here’s a list of things you can reasonably do on the side as you’re working a full-time job to explore an idea for a great new business:

1. Research your idea (figure out the market, talk to prospective customers about what they would like, see who your competitors are, and so forth).

2. Undertake legal incorporation and trademark protection (the latter when necessary; most companies don’t need a trademark at first).

3. Claim a web URL and build a website or have it built; get company e-mail accounts.

4. Get a bank account and credit card (you’ll generally have to use personal credit at first).

5. Initiate a Facebook page, a blog, and a Twitter account if appropriate.

6. Develop branding (e.g., get a logo designed, print business cards).

7. Talk it up to your network; try to find interested parties as cofounders, staff, investors, and advisers.

8. Build financial projections and draft a business plan (if necessary).

9. Engage in personal financial planning (e.g., cut back on expenses, budget for startup costs, and so on.)

10. Create a mock prototype and presentation for potential investors or customers.

If all of this sounds like a lot of work to do before you’ve even really gotten started, you’re right. Getting this stuff done while holding down a job would be a significant commitment. You might not have time to hang out with friends and family and do the things people like to do when they’re not at work.  It is doable, though; I’ve seen it done or done it myself.

You’re just getting started. There’s a big jump in difficulty when it comes to the next things:

1. Raise money. In my experience, fledgling entrepreneurs focus way too much on the money—you can get most things done and figure out a lot without spending much. That said, most businesses require money to launch and get off the ground. For example, the average restaurant costs about $275,000 in construction and startup costs.  Finding initial funds is the primary barrier most entrepreneurs face. Many people don’t have three or six months’ worth of savings to free themselves up to do months of unpaid legwork.

2. Develop the product. Product development is a significant endeavor. Even if you’re hiring someone to build your product, managing them to specifications is a huge task in itself. You can expect vendors to take twice as long and cost twice as much as you’ve planned for. Think of the last home improvement project you paid a contractor for; most experiences are like that. Depending on the product, you may need to travel to find the right ingredients, partners, and suppliers. This phase might require raising additional money as well. In some cases, you might want to patent your product, which will involve a patent search and thousands of dollars in patent attorney fees.
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Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

Professional Services as a Training Ground.  

As we’ve seen, one of the most frequently pursued paths for achievement-minded college seniors is to spend several years advancing professionally and getting trained and paid by an investment bank, consulting firm, or law firm. Then, the thought process goes, they can set out to do something else with some exposure and experience under their belts.  People are generally not making lifelong commitments to the field in their own minds. They’re “getting some skills” and making some connections before figuring out what they really want to do.

I subscribed to a version of this mind-set when I graduated from Brown. In my case, I went to law school thinking I’d practice for a few years (and pay down my law school debt) before lining up another opportunity.

It’s clear why this is such an attractive approach. There are some immensely constructive things about spending several years in professional services after graduating from college. Professional service firms are designed to train large groups of recruits annually, and they do so very successfully. 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.
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Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

The Prestige Pathways Part II.  

You could ask, so what if our talented young people all march off to become lawyers, doctors, bankers, and consultants? Isn’t that what smart people are supposed to do?

There are a few problems with this stance. First, the degree to which the recruitment infrastructure exists is a relatively recent phenomenon. Bain and Company, a premier management consulting firm, wasn’t founded until 1973—now it employs over 5,000 talented people and recruits hundreds per year. The financial services industry has mushroomed in size, with Wall Street firms employing 191,800 at their peak in 2008, up from only 65,300 in 1975. The growth in professional services has given rise to an accompanying set of recruitment pipelines only in the past several decades.

Yet the allocation of talent is a zero-sum game. If the academically gifted are funneled in higher numbers toward finance and consulting, then lesser numbers are going into other areas, such as the operation of companies, startups, and early-stage enterprises. In the United States, companies with fewer than 500 employees account for almost two-thirds of net new jobs and generate thirteen times more new patents per employee than do large firms. If the US economy had generated as many startups each year for 2009–12 as it had in 2007, the country would have produced almost 2.5 million new jobs by 2013. If we’re interested in spurring long-term job growth, we want as much talent as possible heading to new firms so that more of them can succeed, expand, and hire more people.
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Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

The Prestige Pathways.  

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 reseNavigator, 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.
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Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO. 

Smart People Should Build Things. 

I believe there’s a basic solution to our country’s economic and social problems. We need to get our smart people building things (again). They’re not really doing it right now. They’d like to. But they’re being led down certain paths during and after college and told not to worry, they can figure it out later.

Take me, for instance. I wasn’t very enterprising when I graduated from Brown in 1996. I had a general desire to be smart, accomplished, and successful—whatever that meant. So I went to law school and became a corporate attorney in New York. I figured out I was in the wrong place after a number of months working at the law firm. I left in less than a year and cofounded a dot-com company, Stargiving, which helped raise money for celebrity-affiliated nonprofits. It was extraordinarily difficult. My company failed spectacularly, but I recovered. I went to work for a mobile software company, Crisp Wireless, and then a health care software company, MMF Systems, over the next five years, eventually becoming the CEO of a test-prep company, Manhattan GMAT, in 2006.

I spent five years running Manhattan GMAT, helping young people get into business school. I taught our corporate classes of investment banking analysts and consultants at Goldman Sachs, McKinsey and Company, JPMorgan Chase, Morgan Stanley, and Deloitte, as well as hundreds of individual students over the years. Some were exactly where they wanted to be. But there seemed to be just as many top-notch young people who wondered why they didn’t like their jobs more. They sought a higher sense of engagement with their work and their careers. Sometimes they would put words to what they were looking for; they’d say they wanted “something entrepreneurial” or “to be really excited about something.”
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We’re excited to share an update from our former President, Andrew Yang, who left us to found the Venture for America fellowship program. Venture for America Fellows, once selected, work for 2 years in a start-up or growth company in a U.S. city with the goal that they go on to become entrepreneurs. Each class receives $100,000 in seed funding at the conclusion of the 2 years. VFA supporters and board members include Jeff Weiner, the CEO of LinkedIn, Tony Hsieh, CEO of Zappos, and David Lee of SV Angel among many others.

Over the past two years we’ve had Andrew introduce Venture for America, we shared the Time Magazine story about VFA, and we announced their latest Summer Celebration. We even shared that time that Andrew met President Obama!

Now we want to let you know that the application deadline for the 2013 fellowship is rapidly approaching! You can apply here.

Here’s the update from Andrew and Venture for America:

VENTURE FOR AMERICA , FINAL APPLICATION DEADLINE APPROACHING! 

Venture for America  sends young, talented graduates to work for startups in emerging cities (ie. Cincinnati, Detroit, New Orleans, Providence, Las Vegas, Baltimore, etc.), with the goal of mobilizing them as entrepreneurs moving forward.

VFA’s mission is threefold:

To revitalize American cities and communities through entrepreneurship. 

To enable our best and brightest to create new opportunities for themselves and others.

To restore the culture of achievement to include value-creation, risk and reward, and the common good. 

VFA recruits the best and brightest recent college graduates, provides them with training and mentorship, and places them at partner startups to help grow those organizations. This is an opportunity for students who want to learn how to build companies.

The 2013 Venture for America Fellowship consists of the following components:

· Training “ a 5-week crash course in startup readiness, held at Brown University in Summer 2013

· Company Placement “ 2 years of work at a start-up or early stage company

· Programming and Capstone “ Regular assignments, readings, and meetings, including a $100k prize at the conclusion of the program

The final deadline to apply for the 2013 fellowship is February 18th. To learn more, visit www.ventureforamerica.org or email lauren@ventureforamerica.org today!

We have an update today on former Manhattan GMAT President Andrew Yang. Andrew left us a year ago to start Venture for America, which has put him in the news recently.

We at Manhattan GMAT are incredibly proud of what Andrew has done with Venture for America and we wanted to pass along an opportunity for you to help support that great organization. On Tuesday, June 12th, Venture for America is having their 2012 Summer Celebration fundraiser in New York City with featured speaker Tony Hsieh, CEO of Zappos. Tickets are $250 (or $500 for VIP) and can be purchased here. Additional details can be found via the image below. We’ll all be there and we would love to see you there too.

If you’re unable to attend the fundraiser but would still like to support VFA, you can make a contribution to their Summer Celebration fundraising campaign

Andrew Yang, our former President here at Manhattan GMAT, recently left us to pursue his own vision: creating a non-profit organization which aims to place college grads with start-ups across the country, following the model for Teach for America. Below is Andrew’s description of his new idea, Venture for America:

When a company has a serious problem, it sends its best people to solve it.

Right now our country has a serious problem – we need to create more jobs. And yet, our top college graduates are often not heading to innovative start-ups and early stage companies that will generate jobs and produce new industries. In 2010 over 50% of Harvard graduates went to work in financial services, management consulting, or to law school, with fewer than 15% going to industry, which includes companies big and small. The same picture holds true at other top college campuses.

Despite the numbers, many graduating seniors would have a strong interest in working for a start-up that had the potential to grow. It’s an ambition that’s commonly expressed among students. But there are significant obstacles for a senior looking to pursue this sort of opportunity: Read more