We talk about certain areas of the country being more risk averse than others. For example, one of the reasons Silicon Valley exists is because people and companies headquartered there are more likely to assume risk than in other places of the country, like Chicago.
It’s not only companies and institutions in the Midwest that are risk averse, it’s parents. Parents play a tremendous role in the advice that they give their children, especially when they are starting out.
Let’s play this out hypothetically.
It’s college acceptance season. How many colleges did your child apply to? Back when I was going through the process, most people applied to 2-4. It was rare that kids went more than a few hours away from home. Today, kids will apply to 15, and many will go miles and miles away from home.
I find that parents are wrapped up in the name and public rep of the college their kids go to. Initially, I wasn’t that much different. If my kid went to Harvard, Yale, Princeton, Stanford somehow it reflected on me. It’s how some schools can charge a helluva lot more than other schools. It also has to do with risk. If Junior goes to name school that’s high on some magazine list, they have a better shot at success. Except that isn’t true. I have found in startups that people who attended the pantheon of name schools have just as high a failure rate as those that didn’t. Do you take risk when you send your kid to college by choosing on factors other than the name/reputation?
Recently, Columbia law students wanted finals postponed because of the mental/emotional pressure of events like Ferguson. Really? I understand an event like that might give you pause but as one of my friends said, “I am only hiring law school grads from state schools after that. They work harder and don’t offer up excuses.”
Fast forward to Junior’s graduation. Junior has worked hard and has some opportunities on the table.
- They can go work for a major consulting firm. They will make $80-$100k per year, work really long hours, have a tremendous amount of travel, no time for a real life.
- They can go work for a Fortune 500 firm. They will make $60-$80k per year and start at the bottom rung. They will have to work their way up the bureaucracy.
At the same time, Junior has an idea. They think this idea is huge and can transform the world. Their friend can program, and they have been working on it in their dorm room while they weren’t participating in the college experience. The software works a little bit and they are starting to get customers. They’d have to raise some capital in order to cover living expenses and keep working on the idea. If it hits, Junior could make tens of millions of dollars.
Or, Junior has an opportunity to go work for a startup that has raised a Seed, Series A, or B round of capital. They will have a job with a lot of different responsibilities, and will receive equity as part of the deal. Their salary will be in the $40-$60k range, but is performance based.
What advice do you give them and why? What happens next?
