It’s easier for grads with no loans and debt to join startups but most can’t afford to live on low income/less benefits, specially if they are in high COL areas.
Life in general and anything risky is much easier for folks who graduate with little or no debt. Expenses are certainly an issue in any risky venture. I’m not sure what the question or point is? Ventures are often started as a side business while having another job that can pay the bills.
My S and D’s cinema friends all are managing to juggle their jobs that pay bills with the other ventures they prefer that provide less or no income. It seems fairly common in their circles. Many live with others to cut back on expenses, especially in high cost of living places.
I really like hearing about the experiences of others on this topic. I have had no direct involvement with startups but find the subject interesting particularly the obvious dilemmas that young co-founders of early stage startups face while still in college. My nephew is in his second year at a HYP school and is going full bore as a co-founder of a startup. Both he and his partner are top students who each have one round of finance related internships under their belts in addition to the extensive work they have done on their startup.
His partner, who is a year older, tried to hedge his bets by securing an internship this coming summer at a top IB just to have that as an option in case the startup faltered. Interestingly enough, the IB rejected him from the internship but put a full time offer on the table with a very high base salary when he graduates. The standing offer came the summer before junior year. I imagine his work on this startup and his future intention with it came up during in the interview and was factored into the decision they made.
My nephew skipped applying to any internships for this coming summer and is going all in on the startup. This makes me a little nervous but they have access to seasoned advice through family connections, an adult professional partner, some professors and an incubator program. The brand name of their school has also opened a lot of doors. My nephew recently recruited my son, who is a new grad software engineer at a big tech company, to join the startup in a very minor advisory role in exchange for a small amount of equity. My son is keeping his day job and his role will be to keep certain vendors honest and join an occasional technical meeting. I have advised him to temper his expectations that his equity will turn in a huge windfall.
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My son was an early employee. It was the highest offer he received and included excellent benefits. If startups want to compete for the top talent, they can’t lowball. That said, wages then rise faster in more traditional tech companies. He’s received multiple bumps, but he might make more if he was at Apple or Alphabet.
It is interesting though. Most of them will not view new grads as “top talent.” They typically don’t have the experience, no matter what they did in school or on internships. He was lucky and confident. They were interested enough to at least interview him. Knowing that they didn’t have any new grads, he pitched the idea of an internship, even with a thesis based MS and other full time offers. Eight weeks later, he was a full time employee, and now a Senior level engineer.
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My route was different than most. I started a website about an analysis type hobby while working full time, with no intention of making any money from the hobby website. My initial costs total were under $10 per month – only hosting + domain fees; and my hours were whenever I felt like working, which was much less than a full time job. I enjoyed building something that I could be proud of, like a carpenter or artist might enjoy building for pleasure. The site gained popularity quickly, and a few months after the site went online, I was making more income through the website than my day job in engineering. This led to growing, hiring others, and eventually becoming a small Internet company and partner in another.
I’ve also worked at e tech companies that have a start-up mentality, with only an extremely small number of employees and very limited past history. I don’t have much to add to the comments above. The overwhelming majority of startups fail, but the degree of risk is highly variable depending on the specific company, employee, and external conditions. It is good to have a back-up plan in case the company is not successful, which could simply be working in an in-demand field and having a large number connections, resulting a high probably of being able to find another job quickly.
I agree with the OP that most forum members seem more interested in working at larger well established companies, like Google, Goldman Sachs, Bain, …; rather than smaller companies or start-ups. I suspect the nature of this forum contributes. Kids/parents who are especially interested in “elite” colleges are probably more likely to be especially interested in employers that are also considered “elite.” A smaller, new start-up doesn’t meet this definition.
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I have worked at very large elite companies, and also at a 5 people start up company. The start up was sold for 1 billion few years ago. Unfortunately I left it when they ran out of funding. At that time I had 2 kids to put through school and I couldn’t afford to go without a good salary. They later brought me back to help them with some structure and organization around their startup.
Interestingly, my son’s company was started and mostly staffed by people who bailed or had retired from a large, well established company.
Well the prestige of having those names on one’s resume is certainly appealing. The money too. It’s the dreaded 90 hour a week reputation at least in IB that I think is giving some kids pause and having them ask if there is a better way. They may well end up working that much for their own start up but the upside is much larger. Again, I am no expert but I think some kids think they can get another potential bite out of the corporate apple if they go to business school after their start up so they don’t feel as bad giving up their traditional job opportunities out of undergrad.
Those traditional jobs will always be there. Joining a startup does not preclude other opportunities down the road if the startup doesn’t pan out. Depending on the experience gained in the startup, the risk-taker may be even more attractive to established companies.
But business school costs. Unless the company is paying for the MBA, a young person who may also have undergrad debt should be careful about acquiring even more, especially before acquiring some years of solid work experience. Most startups don’t have the luxury of paying for degrees or allowing their resources the time to attend. Mine certainly didn’t; we could spare no one and did not have cash to burn outside our product and service efforts. By the time we could, we were no longer considered a startup.
I posted above that I left my startup for HBS, and I’ve posted elsewhere that I left the program in the first year. People drool over MBA starting salaries, but they don’t understand that most students were making very good money going into these programs, so those foregone earnings are not a mere bag of shells. It’s the delta between the incoming and outgoing salaries that is the telling metric. For me, even if I gave myself a 10% earnings boost due to being one of the older, more experienced students in my section, the breakeven was almost ten years. I knew that going in, but once I was actually in the program, it became clear that it was the network more than the material that was valuable, but that was not relevant enough to keep me from wanting to get back to a serious paycheck and adult life.
Elite MBA programs require work experience for admission. When I applied to HBS, the minimum was five years, and those years needed to indicate that you were going to be successful with or without the degree as these programs cherry-pick for winners. As was explained to us on a tour, applying to HBS for an MBA is like applying to a bank for a loan. The more you can prove you don’t need it, the more likely you are to get it. Being instrumental in breathing life into a successful startup was one way to prove that.
But, my section was also packed with students from IBs, MCCs, and other large corporations where they already held the positions outsiders might think they were there to attain. Many of these companies were paying for the degree simply to add to the corporate bona fides. The rest of us, who were paying full freight, had unusual resumes and were pursuing the MBA for the network and additional polish. No one was there for the chance at a potential bite out of the corporate apple. Everyone there had already eaten the whole thing; that’s how they earned their seats.
I’m sure none of this is a surprise to anyone, but I’m sharing it to point out that those with an entrepreneurial bent who are drawn to startups are risk-takers. They don’t have any regrets about passing on traditional roles, and most don’t see an MBA as a goal. They are too busy making something unusual happen and, when it does, an MBA is irrelevant. I wish I had understood that sooner.
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Some of what you talk about such as MBA ROI, is being addressed by the continuing proliferation of one year MBAs. Only one M7 school offers a one year option (Kellogg) but several in the next tier have these programs: Duke, NYU, Cornell, Notre Dame, Emory, USC.
If your parents can afford to fund MBA at any top 10 program, would you go there right after undergrad or accept job at one of the top 10 consulting firms to gain experience and company sponsored MBA?
There’s a reason why top MBA programs require years of experience
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I guess it depends on whether or not the program accepts students right out of undergrad. Harvard doesn’t, or didn’t at the time. Michigan has a program that accepts undergrads directly to Ross, but I’m not sure how many other top programs do.
I would avoid getting a job at a start-up out of college. Many, if not, most entrepreneurs don’t know what they’re doing. Otherwise they wouldn’t be calling their company “revolutionary.” It’s best to be mentored from a company that’s already established. You’d be better equipped for a startup after some experience. This way your contribution would be much more valuable, because you’d then be an experienced skilled professional.
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I have done four startups in my career. If I were to put them in baseball terms, one was a triple, one was a single, and two were strikeouts. Both the triple and single ended up being acquired by other larger companies and I found the acquiring companies to be really lethargic compared to how productive a startup environment can be.
One recommendation I have is if you end up in a startup that fails, to join an established company next for at least a few years before going back into the startup world. Those who end up in two successive failed startups may have difficulty finding a job after that.
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Also, they can know what they are doing from both a technical an design aspect, but not have the leadership or business acumen for long term success. There are many reasons most startups fail.
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If it’s a startup with established players with valuable industry connections then it’s almost always worth much more than the monetary payment. You build priceless connections and have the opportunity to work side by side with mentors you would gladly pay yourself to learn from. You can literally cruise to your dream jobs.
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This kid has an acceptance to UT McCombs. He was accepted there for Undergrad Business Honors as well but decided to attend Brown. If he takes the job then may be he can get into one of his dream programs but it will take few years. I doubt it’s going to make a big difference in entirety of his career.
Which top business programs have a pre-requisite of work experience?
Kellogg says they strongly recommend at least 2 years of work experience.
Johnson School at Cornell says 2 -5 years recommended but they have a 5 year combined BS/MBA program for “outstanding students”.
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Apologies if I missed this but who is this kid you are referencing? Feel free to PM if easier.
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