Harvard, Goldman, Startup

Roger Ehrenberg just posted an essay about why Harvard students prefer Goldman Sachs to a 15-person startup, which I found via Chris Dixon’s excellent Twitter feed. Roger speculates that “many equate start-up enterprises with uncertainty and fear, and only appropriate for those with massive risk tolerances.” This seems to me like the thinking of someone with a family who left a high-income job.

To my mind, fear that a startup will fail isn’t why Ivy-League graduates spurn startups. At least when I interviewed for a job out of college, it never occurred to me that a startup could fail. The startup was run by adults, and my relationship to adults was defined by their judging whether I succeeded or failed, not the other way ’round. Few college-level candidates have ever asked about Redfin’s financial performance, even when we had less than three months of cash in the bank.

So if it isn’t the risk of failure, what is it? I think the reason that startups struggle to recruit out of the Ivy League is more subtle:  startups just don’t seem elite to someone who has spent her whole life pursuing ever-more elite institutions. Since you aren’t likely to persuade a Harvard graduate that status doesn’t matter, you have to persuade her that your startup can confer status.

The status problem becomes evident when you compare a start-up to Goldman, then to Harvard. Harvard is self-evidently discriminating; like Goldman, it is notorious for interviewing many and accepting few. To college graduates who still believe in the Wizard of Oz, the bespoke suits and penthouse suites simply define new strata of ambition. By contrast, a start-up has ratty carpet and goofy people, who tend to be either anti-social or over-eager — or, like me, both. Few college students realize that many startups are pickier than Goldman; if the students knew how many candidates a startup rejects, more would apply.

Just as importantly, Harvard is broad, with courses in humanities, sciences, arts and engineering; Goldman covers many industries, with a wide range of abstract products like debt and equity that seem foundational to the entire economy, even intellectual. By contrast, a startup — whether it’s making real estate more consumer-friendly or inserting ads into mobile applications — can seem narrow.

What students don’t know is that banking analysts just run the same spreadsheets day after day, whereas new recruits often get to do everything at a startup. In my first few months at a startup; I wrote a white paper, learned Visual Basic and flew to Italy, where we tried to sell shrink-wrapped software at a trade-show for cash.

Moreover, Harvard is highly structured, with a four-year program defined by prerequisites, degree requirements, grades, honors criteria and graduation ceremonies. Likewise, Goldman has two-year programs, followed by business school or a promotion to the lofty title of associate. A startup has someone who will point you to a desk, and tell you to figure out for yourself how to connect to the network; where you make your way from there is anyone’s guess.

The problem isn’t that this lack of structure is intimidating; it’s that it’s potentially aimless. In my disorienting post-graduate world, the only direction I wanted from anyone was to figure out which way was up.  It was obvious at Goldman which way was up, because there were a dozen floors above you that you’d never visit until you had evolved from your current larval stage between frog turd and human.

Finally, Harvard, like Goldman, is filled with lots of people from your socioeconomic background, which you can befriend or even date. This is important when you’re moving out of the dorm and into a new city. If it recruits enough young people, a startup can function as a second dorm — it can be a sea of love — but most students don’t realize it. The only reason I joined my first startup instead of a bank or a consultancy was because I saw, during an office tour, the back of Michael Smedberg’s very young and handsome head. I thought he looked like someone who could be my friend. Seventeen years later, we are still friends.

So to recruit from the Ivy League, startups have to get elite: give recruits a brass ring to reach for, a sense of the broad responsibilities they’ll get, a structured program for touring those responsibilities, and a group of cohorts to poke on Facebook.

And yes, we have to take Roger’s advice, and speak at top universities every chance we get. Redfin, for example, is speaking on May 18, 3:30, at a University of Washington colloquium on why some universities produce entrepreneurs and others don’t. If you’d like to come, leave a comment and we’ll see if we can get you in…

(Photo credit: Mailaliasgar on Flickr)


  • Nathan


    Great post! As a tech hiring manager at a startup, “Google” replaces “Goldman”, but the draw of status and a built-in professional network remains the same.

    Startups can definitely increase their perceived status by conveying their impact with targeted proof points. For example, a message like “Redfin agents dominate the top 10 of the Seattle and Boston markets closing over $80 million in Q1 2010 sales” is tangible & sends a positive signal to a prospect.

    Curious if Redfin has experimented with any alternative approaches to student talent identification strategies in addition to Ivy/Top 10 school recruiting?

    Finally, I’d be interested in attending the UW presentation if there is space available.


  • http://blog.calbucci.com Marcelo Calbucci

    Glenn, this reminds me of Ben Horowitz blog post on why big company execs don’t make good employees at startups (see http://bhorowitz.com/2010/04/21/why-is-it-hard-to-bring-big-company-execs-into-little-companies/)

    It’s the “incoming” vs. “demand generation” issue. At startup you are expected to generate your own work. If you sit and do nothing, nothing happens. You have to go get it. On a big company (or more structured environment), you sit and wait to be told what to do, and they will tell you. I think this is comforting for most people, Ivy League or not.

    • http://blog.redfin.com GlennKelman

      A very wise comment Marcelo…

  • anon

    Cute guess.

    People go to Goldman for the money and power.
    Pay Goldman salaries, and provide Goldman connections, and you’ll have applicants beating down your door, and you’ll have to turn away most of them, and your firm will be considered “elite” as well.

  • http://www.zillow.com Spencer Rascoff

    Great post. The title certainly caught my attention, and not only because I had already seen the discussion on several blogs, all of which Ehrenberg’s post started. It caught my attention because I have the distinction of actually having gone to Harvard, having worked at Goldman Sachs, and having worked at several startups. Yes folks, it does happen.
    I definitely agree with your explanations of why Harvard grads (and others from top colleges) gravitate towards companies like Goldman rather than going to startups. When I was coming out of Harvard in 1997, hardly anyone went to a startup. I literally know only 1 person from my class of 1600 who went to an Internet company (ebay), and I know at least 300 that went to Wall Street and another 100 who went to consulting companies. To your list of reasons, I’d add this: those companies recruit on campus! It’s actually quite easy for a Harvard undergrad with a decent transcript to land a plum six-figure job right out of college on Wall Street. But it’s quite hard for them to drive up and down Silicon Valley begging people for an interview. The path of least resistance is clearly to follow the hordes to Wall Street, as I did.
    To make matters worse, there’s a woefully insufficient infrastructure at Harvard when it comes to fostering entrepreneurialism. Harvard is working at changing this, and I’m trying to help. There’s a relatively new center at Harvard which provides office space and mentorship for undergraduate startups. It’s nothing like the environment which Stanford provides, but it’s a start.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    @Nathan, we recruit mostly at Stanford, Cal and UW. The message we focus on is how fun the work is, and what we’ll do for candidates’ careers. Details on the colloquium are here:
    I’ll save a seat for you. Please come!

    @Anon, I agree that Goldman pays a lot, but money isn’t the only reason graduates go there. I think the main reason is that they want prestige, and to be surrounded by smart peers.

    @Spencer, totally agree that startups need to recruit more out of the Ivy League. It’s a negative cycle. We don’t recruit there because we don’t succeed when we recruit there, and then we don’t have many young alums. This year, we did get one guy out of Yale…

  • Naggi Asmar

    Hi Glenn, I know this is somewhat simplistic, but it has some truth. The tradition of Ivy schools still is to concentrate on rounding out future leaders. It's about conformity to the expectations of your family and people. Western schools are more about non-conformity. When I was at Berkeley, I knew a lot of New Yorkers and other Easterners who came there expressly to get away from this culture. It's going to be difficult for tech companies to chip away at this history.

    In the first startup I worked for back in 1995, I had to assemble my desk on the first day. :)

  • Katie Sharrow-Reabe

    I say it is a large part recruiting strategy coupled with a bit of Marcelo and Naggi's sociology. As a recent grad from a top school (Univ. of Michigan), I watched many of my intelligent, talented friends take jobs with large corporations because they offered immediate experience, prestige and paychecks. None of my friends intended to stay at this first job for long — some less than two years. They despise the culture, and complain about having hardly any real work to do. But after graduating college, they were exhausted. They didn't want to spend months (or years) seeking out the perfect company or sending out resumes. They didn't want to worry about having to convince their parents (or themselves, for those who had to take out loans) that their money was well-spent. They consider me a fool for not having shared their course of action, and maybe I am! And in regard to colleagues, crazy fools are the ones for me.

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