Why grads should choose a start-up over Wall Street

The conventional wisdom is that the flood of top students to management consulting and finance is basically irreversible. Those industries pay so much, are in such desirable cities, can hire so many graduates, and have such deep alumni networks on campuses that small businesses simply can’t compete with them for top talent.

At least, that was the conventional wisdom. Then Teach for America came along and upended it, attracting 48,000 applicants — including 12 percent of Ivy League seniors — for 5,200 annual spots, none of which pay well and most of which are in cities that are decidedly not New York or Boston. The electric response to Teach for America convinced Yang that graduating seniors wanted more options. They just weren’t sure how to find them.

Ezra Klein

Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.

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• Why grads should choose a start-up over Wall Street

Venture for America intends to correct that. You might have heard that small businesses create the majority of jobs. Recent research by John Haltiwanger, Ron Jarmin and Javier Miranda for the U.S. Census Bureau disproved that. It’s young businesses that create jobs. “Once we control for firm age there is no systematic relationship between firm size and growth,” the authors conclude.

Think about a young business. Usually, it’s small and obscure, with little brand equity. Its founders are probably extremely busy, particularly if their business is succeeding and has the potential to create a lot of jobs in the future. And the company probably has only a couple of positions to be filled at any given time.

That’s pretty much the opposite of big banks and management consulting firms, which have many open positions, many employees who can do recruiting and deep brand equity on every Ivy League campus. “It’s the organizations with the most resources that get the best talent,” Yang says, “while the young businesses that will be creating all the jobs don’t get the talent they need.”

Teach for America solved that problem by providing schools across the country with the recruiting capacity and brand equity they lacked, enabling them to pool resources to attract top students. Venture for America is eager to play a similar role, serving as the middleman between small, growing businesses and students who might want to work for them.

In its first year, Yang estimates that Venture for America received about 500 applications for 40 slots. The jobs are in fast-growing companies that are less than 10 years old, and they pay from $32,000 to $38,000. Right now, Venture for America is working with companies in Cincinnati, Detroit, Las Vegas, New Orleans and Providence, R.I. Next year, the organization expects to have more than a thousand applicants for 100 positions, allowing expansion to Baltimore; Cleveland; New Haven, Conn.; Pittsburgh; and Raleigh-Durham, N.C.

As for Mike Mayer, he’s finished with Wharton and heading to New Orleans to work at a small software company. “There is a sense of creating something, of creating real tangible value,” he says. “A big bank does create value for our economy, but as a first-year analyst among 80 or 90 peers, you’re not seeing it. At a start-up, you’re seeing it every day.”