Author: Andrew Yang
|Smart People Should Build Things (2014) discusses the talent allocation problem in America. According to the author, smart and talented students should start their own ventures and become entrepreneurs. The reason is that there will be more healthy companies in the country and so the country’s economic problems will be resolved. Moreover, the author has motivated the readers to start non-profit start-ups.|
Have you ever thought about talent? Where do all the talented University toppers go? Well. The author Andrew Yang has discussed this in his book Smart People Should Build Things. Yang claims that becoming a doctor or a lawyer isn’t all that difficult. The road to those fields is well-paved, and it requires a great deal of effort. But not an entrepreneurial muscle. A person can make a successful income by pursuing one of the six predefined routes of success. Only, if they are willing to work long hours, spend money on school, and pay dues. But what the country actually needs is employment, particularly in emerging businesses. There are no sophisticated transactions without thriving companies to sustain the bankers, attorneys, and consultants.
Another question that comes to my mind and maybe you as well is what actually helps in increasing the economy of the country? The author has answered this question that it’s the new ventures and not the professional companies.
The author uses his own experience, from Phillips Exeter through Brown to Columbia Law School, to demonstrate his thesis. Drifting into a field he didn’t care for, Yang discovered that as a lawyer, he was earning more than his father. A Ph.D. with many IBM patents. He quit his job and entered the startup industry. Although he failed at it the satisfaction of creating something, even if only for a short time, drew him in. He chose to learn tips and tricks from a more seasoned entrepreneur. He learned his lessons the hard way.
Smart People Should Build Things Key Points
Small ventures help increase the economy
We all think that big professional companies benefit the country’s economy. But that’s not true. The truth is ventures and start-ups play a major role in increasing the economy of a country. Big businesses do not create jobs or increase the economy. Nonetheless, they continue to expand, and fewer people are starting their own businesses. The question here arises where is the innovation? Talented young graduates have the potential to start their new ventures.
Moreover, new businesses account for all net job growth, not just a portion of it. Big businesses do not contribute to employment creation in any way. As businesses become larger, the majority of them aim to automate as much as possible. Besides this, to figure out how to cut rather than increase the number of personnel.
The issue is that big corporations are gaining the upper hand over new businesses. Firms that are less than five years old used to make up half of all businesses. Now they make up less than a third. Since 2008, the majority of Americans have worked for organizations with 500 or more employees.
Talent allocation problem
So, what if all of our bright young people go on to become lawyers, doctors, bankers, and consultants? Do you support this?
This viewpoint has a number of flaws. To begin with, the existence of a recruitment infrastructure is a relatively new phenomenon. Nonetheless, talent distribution is a zero-sum game. If more academically gifted people are channeled into banking and consulting, fewer people are moving into other fields like company operations, start-ups, and early-stage businesses. Companies with fewer than 500 employees contribute to about two-thirds of net new jobs in the United States. They generate thirteen times more new patents per employee than huge corporations. If we want to see long-term employment development, we need as much talent as possible to go to new companies. That’s because there are more of them.
By definition, professional services businesses such as finance, consulting, and legal services are meta-industries. That is, they assist huge corporations in raising funds, purchasing, and selling assets. That is, they assist huge corporations in raising capital, buying and selling one another, reorganizing, implementing new systems, conducting complex transactions, and so on. They are reliant on businesses forming and growing large enough to hire them. In order for service businesses to survive, the economy needs more companies to start, grow, and succeed. If Mark Zuckerberg had gone into investment banking, the bankers would not have had Facebook to take public. Instead of heading in their direction, he founded his own company, which is significantly better for investment banks and everyone else.
Big companies and their golden handcuff culture
Most of you have heard about how big companies give tough times to their employees. The author has explained it in the book by using the term “golden handcuff”.
Most of these organizations have a rigorous application procedure and elite college grads are well-prepared to navigate it. After all, it’s not unlike getting into a prestigious university. It’s difficult to stay with these companies because of the long hours, monotonous tasks, and a culture that doesn’t tolerate mistakes. “Up or out” is a popular mantra in certain industries. Let’s get into details of up or out!
You either get promoted every 2-3 years or you’re dismissed. Depending on the firm, annual employee turnover can surpass 30%. That means one of your two cubicle neighbors is unlikely to return next year. The only thing more difficult than staying with these businesses is leaving them. The longer you stay, the worse the situation will become. It’s difficult to let go of the money, the perks such as automobiles, food, lodging, and the people you meet.
Smart People Should Build Things Quotes
Some of my favorite quotes from the book are:
“You’ll choose to do something for a few years, and you’ll still be the same you. This isn’t the case. Spending your twenties traveling four days a week, interviewing employees, and writing detailed reports on how to cut costs will change you”
“We’ve let the market dictate what our smart kids do, and they’re being systematically funneled into obvious, structured paths that don’t serve them or the economy terribly well.”
Smart People Should Build Things Review
The basic message is that high-achievers may, and “should” take a risk and start a business instead of attending graduate school. Andrew Yang’s quest for a paradigm change is a good one. College students are given too few options and are informed that getting the best marks will lead to the biggest wage. Furthermore, they have been told that this is a safe path to take and that the only things that matter are security and good pay.
The book Smart People Should Build Things is recommended to all young graduates. The book will motivate them to do something out of the box and be innovative. Moreover, all aspiring entrepreneurs should read this book.