The 'Teach for America' for Entrepreneurs?
Andrew Yang believes entrepreneurs can help save cities, especially those whose economies have been ravaged by the recession. Yang gave up a law career almost immediately after he started, realizing the mega-firm life was "a less than ideal use of a lot of smart people's time." He founded Stargiving.com, a celebrity affiliated philanthropic fundraising site in 2000, right at the end of the dot.com bubble. About a year and a half later that business was washed out to sea with many others. Yang still had a six-figure law school debt to square away, but had been bitten by the start-up bug. He decided to apprentice himself out to other entrepreneurs to learn more about starting businesses.
He worked for a mobile software company until it ran out of money, then went to a healthcare software company, working as the vice president of client services. The company went from zero to $2 million in revenue while he was there and Yang helped raised $7 million. He also worked, simultaneously, with the test prep company Manhattan GMAT—as both an instructor and writing some of the original teaching materials. In 2006 he became CEO of the company. Yang expanded Manhattan GMAT to 24 cities and it became the No. 2 national GMAT prep company after Kaplan, which then bought it. In May he left and today launches Venture for America, a non-profit that will send new college grads interested in entrepreneurship to work at start-ups in economically depressed cities nationwide.
Yang talked to Inc.com contributor Eilene Zimmerman about leveraging young talent, and how start-ups can be an important part of the economic restoration of recession-weary cities like Detroit and New Orleans.
How did you come up with the idea for Venture For America?
Having been to law school and then having worked briefly at a big firm, I felt this really wasn't the best use of young talent, not for the law firms and certainly not for society. You took an army of very bright grads and turned them into an army of indebted, unhappy lawyers.
As an entrepreneur myself, I had started companies that failed. I think there's this myth people believe, that a college dropout can start a million dollar company. That person is the outlier. For the most part, entrepreneurship is like other professional paths, where you get better at it over time. I think the ideal way to learn how to build a business is to be alongside someone who is doing just that.
I also saw how successful Teach For America has been. It's a magnet for top tier college graduates, the single biggest employer of college grads in the country—4,500 hired this year out of 46,000 that applied. Twelve percent of Ivy League seniors applied. What we took from that was the belief there's a huge demand for opportunities to develop professionally and, at the same time, give back. There's a real desire among college grads to learn how to build a business and at the same time create jobs in places like Detroit and New Orleans. And those cities are desperate for the talent. I thought, why not start an organization that puts these two pieces together?
What cities have been identified as those that will get help from VFA?
This first year we are starting with Detroit, New Orleans and Providence. The big advantage with these cities is that they have an entrepreneurial ecosystem in place. When you meet someone within that ecosystem, they can refer you to others. Detroit especially is very closely knit, so it was easy to get introduced to a variety of start-ups. In New Orleans, there is one building—80,000 square feet—that houses more than half of the start-ups in the city. We've also been in contact with the mayor of Newark, N.J., Cory Booker and are looking to work with several other cities as well.
How has your idea to funnel new grads to new businesses being received in these cities?
The businesses in these cities were, by and large, really excited about the idea. Some of these businesses are finding that because they can't find people to hire they are also having problems raising money. One of the things we heard a lot was that start-ups don't have the resources and bandwidth to engage in any kind of campus recruitment. They can't compete for the top grads. Most of them have their hands full just doing what they need to do to start up. Potential investors don't want to invest without seeing that these companies can hire good people when they need to. If you're in one of these economically depressed cities, the thought is your talent pool might not be as deep and wide as it would be in a larger market, like New York City or San Francisco. While cities like those are experiencing massive inflows of college grads, many of these cities we want to work with are seeing massive outflows.
Did you fund the launch of Venture for America yourself?
I contributed some of my own money, as well as that from other philanthropic entrepreneurs. Right now have commitments for about $500,000 and received a significant corporate sponsorship from the company IAC. It is an Internet conglomerate chaired by Barry Diller. We also have a board of 15 directors from a variety of industries.
What kind of expertise can a graduate with little real world experience provide to a start-up?
What most start-ups look for in an entry-level hire is versatility, problem solving skills, the ability to get things done and the ability to multi-task—not previous experience. Just as important is an employee that can grow with the job and the company. They aren't being hired to do just one job, but to help move the company forward and grow. Start-ups need this new grad to be working towards a job that's two or three years away. These businesses want high caliber people they can work with and support.
Is it realistic to think start-ups in these cities will have a significant impact on the local or national economy?
Our goal is to create 100,000 jobs in the U.S. by 2025. One way is to have our people working at start-ups and eventually serving a senior role there, helping to hire others. Another avenue is to have our fellows ultimately start their own companies and hire others. Our goal this year is to have 5,000 applicants and send out between 50-100 Venture for America fellows to start-up companies.
What is the application process like for new grads?
The application process opens August 1, 2011. College seniors can go online and submit a series of materials—resume, transcripts, essays, and recommendations. If we identify them as having high potential, they get a phone interview; after that an in-person interview. We're conducting a tour of national universities throughout the fall. We'll send entrepreneurs affiliated with VFA to speak at entrepreneurship student organization and talk about our fellowships.
What happens to the applicants who still have the entrepreneurial itch but don't wind up with a VFA fellowship?
Ultimately, we want to be the centralized talent recruitment structure for start-ups throughout the country. We can go to the students that were finalists and help them find an appropriate job with a new company. We will have a database that start-ups can use to see all the VFA finalists and their credentials. That's how we will create 100,000 jobs. I know when I was running a company, I would loved to have a database like that at my fingertips.