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"Top of Mind" with Nathan Kurtz, Episode 37, 10/31/2013
>>> Hi. I'm Nathan Kurtz, guest host of "Top of Mind." And today we're very excited to
have Andrew Yang with Venture For America. Andrew, start off by telling us about your
entrepreneurial experience and starting of VFA.
>> Sure. Well, I wasn't what you'd consider an enterprising young person I don't think.
When I was growing up my parents told me just do well at school. And so I graduated from
college, didn't know what I wanted to do initially and went to law school. Found that that wasn't
the right path for me and so I started a dot com in the first bubble that had its mini
rise and maximum fall over a couple of years. And that was the first real exposure I had
to entrepreneurship. And I found it was really hard, honestly. I mean, my company flopped.
And so I was determined to get better. So I apprenticed myself to a number of more experienced
entrepreneurs over a multi year period. And wound up the CEO of a test prep company called
Manhattan GMAT that went on to become acquired by the Kaplan/Washington Post in 2009. So
from these experiences I learned a number of things. One, recent college graduates aren't
100 percent sure what they want to do and so often choose paths that are presented to
them by others. Two, starting a business is really, really hard. I mean, I tried that
and it did not work out. But three, you can get better by working with more experienced
mentors and leaders, which is how I developed over, over the years. And so that's how Venture
For America, really the foundation of it, came about in terms of the ideas. I realized
that our young people needed a path towards startup businesses that would help give them
the training and exposure to potentially become business leaders and founders themselves some
day. >> Tell me more about the problem you're solving
with VFA. Tell me about the path right now and college graduates are coming out of school.
What are the options now and what are you guys doing to change that?
>> Well, you know, and I spoke to my own experience, going to law school is still very popular
among young people who are looking to advance professionally. There are six default paths
right now for national university graduates; law school; financial services, that's investment
banking; management consulting; medical school; academia, so it's PhD programs and the like;
and teach for America. And really if you're trying to get into startups or entrepreneurship
the path is not clearly laid out for you. I joke that there's a plumbing problem. And
what we need is we need a new pipe. We need a new connection between startup organizations
that are going to end up growing, innovating and creating new jobs and the young people
that want to develop and contribute. >> How does the program work?
>> Sure. Well so what we do is we recruit top national college grads from around the
country. And we bring them to training camp for five weeks where they become friends with
each other and learn a bit about how startups function. We bring in entrepreneurs and investors
to speak to them. We also bring in top firms like IDO and McKenzie to help whip the fellows
into shape. And then they move to places like hopefully Kansas City, but right now we're
in Detroit and New Orleans, Providence, Cincinnati, Las Vegas, Baltimore, Cleveland and Philadelphia.
So the fellows then move to these cities and work at a startup company in that city for
two years with the goal that over those two years they'll get a sense of how these organizations
grow and develop. At the end of the two years they can either stay at that company, become
a manager and get promoted or they can potentially even start their own company. And at that
point we have seed fund that's provided by UBS Americas as well as access to a network
of seed investors that will hopefully give them that first leg up in order to start their
own business. >> Great. Tell me about how you choose the
cities you're in. >> Well the first criteria is that there are
compelling opportunities for these young people. So most enterprising 22 year olds, no matter
how talented, are not quite at a point where they're ready to start a business. It could
be they don't have the idea, they don't have the team, they don't have the money. So the
hope is that if they work in an existing startup with a more experienced entrepreneur, they'll
be able to help that company grow. So the first thing we look for in these cities is
a set of those entrepreneurs and companies. >> Yeah.
>> So to use Kansas City as an example, over the last couple of days we met over a dozen
entrepreneurs building really cool companies. And so that's the first thing you look for
in a city. Because in our mind if you bring in these young talented people without that
sort of existing company network, then they're unlikely to have the right sort of experience.
The second thing is supportive leadership in that city.
>> Right. >> Because in order for our network to have
the kind of impact we want it to, they, they need to get hooked on the city. And we think
that the supportive leaders of that city can help that happen.
And the third thing is really just quality of experience overall. What I say half seriously
is that if I wouldn't have lived there as a 22, 23, 24 year old myself, then it doesn't
really make that much sense to have a set of young people head that direction. Because
you know, we don't think that their experience would be that good. But I'm happy to say that
there have been phenomenal experiences among the network over the last couple of years
and that the 108 fellows that are working nationwide are generally raving about their
cities and their companies. >> Give a couple of examples of the types
of companies you're working with and some of those success stories that you've had.
>> Sure. So in Detroit there's a company called Accio Energy that's making next generation
windmills that don't use turbines. So it's shaped more like a radiator. And they are
simulating the phenomena that go on inside thunderstorms where there's a lot of moving
water and air. And the generator's generating electricity that way. So the fellow that we
have at Accio is a guy named Tim Dingman who's an engineer out of Brown where I went to school.
And so that's an example of a company we're very excited about that if it works, then,
hey, you know, we'll be making everyone a lot happier because then like there wouldn't
be these giant windmills would be more efficient. Although I love windmills as they are but
if you can make a better one that would be great.
>> Yeah. >> So there are other companies like that
around the country that we're sending talent to and hopefully supporting their growth.
>> Talk to me about the educational process. You have them go to a camp for the summer
before they start. What does that look like really specifically?
>> Well there's academic training which is what most of these young people have had to
date before they show up at our doors. And then there's the action orientation that happens
in the startups. So what we do is we organize them into teams and give them challenges that
we think simulate the kind of work environment they'd have in the startup. We're also very
transparent about rankings and performance. >> Yeah.
>> So that they see how their team is doing relative to others. And we bring in experienced
practitioners to give them coaching at every level. So the hope is that, that, by the time
they show up at the startup they are familiar with the environment and they can hit the
ground running. >> How does compensation work for those fellows
once they're placed at the companies? >> Well in order to derisk it on both sides,
we set an initial rate of approximately 38K as a floor. And then it's up to the company
to go beyond that if the fellow is performing strongly and they feel that that person is
going to end up contributing overtime. >> Uh huh.
>> And so but initially, it's paid all it's always actually paid for by the company. And
initially that rate is set a flat rate in order so it is standard. The companies have
been incredibly pleased where 85 percent of them rated the fellows as their top 1 percent
or top 10 percent of early hires. And a number of fellows have already gotten raises. Some
have even got equity in these companies. So the companies are thrilled with how it's going.
>> What kind of data are you guys collecting at this point from the fellows, from the companies,
and for your organization? >> Well we survey the fellows all the time.
They're actually probably tired of it. So we constantly have various satisfaction measures.
We also have a full time programming staff who follows up with the fellows regularly.
>> Uh huh. >> Among the companies, we talked a little
bit about their satisfaction level with the fellows, we also track how many jobs that
those companies have added. And over the first year at Venture For America the number of
net jobs added by the companies is over 100. So you can see that the companies are growing
and the fellows are at least having some part or role in that.
>> And you've had your first class. And your second class started this fall. As you're
looking for your third class what particular traits, if a college student is watching this,
what traits are you looking for? >> We look for something we call adaptive
excellence. >> Yeah.
>> But what that really means is we think you can figure things out and become good
at things that maybe you're not necessarily proficient in right now. So the way you demonstrate
this, if you're a young person, is by being good at something. We figure if you're good
at one thing you can probably apply the same attributes to another area. So we take people
who are very good at school, which people would find not surprising I'm sure. But also
people that started businesses through their college career, showed leadership at organizations
in starting them or leading them. People who are very high level athletic performance.
We think those qualities of team work and self determination and self improvement apply
very well in this setting. But we're looking for companies that will actually create new
jobs in their city ideally. So if someone were to come up with some kind of like disembodied
widget that was somehow doing something online and was never going to hire anyone, then that's
less interesting to us than if they're going to start a company in Detroit that will then
bring people from outside of the state to join them on a team and then grow from there.
Our goal as an organization is to help create 100,000 new U.S. jobs by 2025. So to get there,
you know, it's helpful if the companies we're starting are actually going to hire people.
>> Tell me about your grand vision. Where do you see VFA going?
>> Well if you can imagine a country where the same body of talent that's currently heading
towards let's say Wall Street was instead going to startups in Kansas City and other
places around the country, I mean, how long would that take to impact job growth and innovation
nation wide, here, other cities. I mean, we think it would not take that long to see an
impact. And so that's the goal. Our goal is to make it so that it is not that we have
massive forces driving our nation's talent in certain directions. And then we sort of
wonder why more people aren't doing other things. We want to create a level playing
field where the people that are wired to build businesses do just that. And the people that
are wired to maybe do what I did, which it turns out wasn't a great fit for me which
was go to law school and become a corporate attorney, are doing that. But it's not that
we tell our talented people hey, you guys should really do one of these five or six
things. We need to create a multiplicity of options for them. And make it so that if we
can unleash the potential energy of more of our young, smart, future business builders,
that's the vision for Venture for America. >> I love how VFA is creating that structure
to allow that. Andrew, thank you so much for your time today. It was great to have you
in town. >> Thanks so much for having me.