Find the Savages
Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
We are inundated these days with headlines about how our college system is broken and how despondent graduates are due to things like outsized student loan debt.
Are these claims merited?
Undoubtedly.
Should more kids be considering the pros vs. cons on paying $100-200 thousand dollars to attend college?
You bet.
But is that the whole story?
Of course not.
The fact is, like most things in life, there is another side of this story that isn’t getting nearly as much attention.
America currently produces nearly twice as many college graduates as it did just two decades ago (from less than 1.3 million in 2000 to more than 2.1 million in 2022). Yet, over this same period, America’s top colleges, as judged by the U.S. News & World Report rankings, have not increased their enrollment numbers in any measurable way. Look no further than Harvard, which has not increased its freshman class in more than three decades (it was roughly 1,600 in 1990 and is roughly 1,650 for the class of 2023).
So why does this matter?
It matters because it has created a supply/demand imbalance between the number of qualified candidates applying for college and the number of available spots at the top schools.
So, who is impacted by this imbalance?
In short, everyone.
However, a disproportionate amount of the impact falls on the students, the companies trying to hire them, and cities across the country where graduates flock to.
Said another way, this new imbalance has caused a “spillover effect” whereby highly qualified students who used to largely matriculate to universities in the Northeast or California are now attending colleges across the entire country. Look no further than the fact that the average SAT score at The University of Florida is now 1420 for in-state students and 1450 for those out-of-state. When I was applying for college two-and-a-half decades ago, those scores would have gotten you into nearly any school of your choice. Now they are the average score for a state university with over 40,000 students. It is the same story at countless other universities across the country.
This means that talented young people are more spread out than ever. It also means that thanks to programs like the Hope Scholarship in Georgia and Bright Futures Scholarship in Florida, more accomplished students are staying in-state, attending large schools, and building out their networks. As a result, the ecosystems around these universities and in the surrounding cities are larger than ever, which is creating more dynamic talent pools, better business formation, and greater entrepreneurship in many communities across the country.
Yet, despite these developments, my impression is that many companies and investment funds have yet to tap into this development in a meaningful way.
But, what if they did?
I recently met someone who has and the results speak for themselves.
A couple months ago, I attended an annual meeting for a national defense-focused venture capital firm at Cavallo Point, which is a hotel that lies practically in the shadow of the Golden Gate Bridge.
On the second night, I sat next to someone at dinner who I will call “Rick”. Considering the nature of this meeting, Rick was straight out of central casting given his strong resemblance to Slider from the original Top Gun.
Rick and I had several conversations throughout the night ranging from being disillusioned Washington Commanders’ fans to growing up in military families. Yet, the part that stood out the most was something he said about his last few years running a division at one of the top banks on Wall Street.
Before I get to this though, it is important to provide a bit more on Rick’s background, none of which I found out until I Googled him when I got back to my hotel room later that night.
See, Rick had been an All-Ivy and All-American college athlete, while simultaneously doing the Reserve Officer Training Corp (“ROTC”) program. After graduation, he served five years as a marine, went to Stanford Business School, joined one of the top banks on Wall Street, did multiple tours in Iraq and Afghanistan after 9/11, served in a presidential administration, wrote multiple books on military affairs, and completed several Ironmans. Yet he barely mentioned any of this during our conversation. Humility is a vastly underappreciated quality these days, but I digress.
Now back to his last few years on the trading desk.
Rick told me that after returning from his second tour of duty, he rejoined his desk and within a short period of time was asked to lead it. In this role, part of his responsibility was to recruit and make new hires. The trouble was that as the years passed, he was finding it increasingly difficult to recruit and retain effective young people from the desk’s seven “target schools” (you can probably guess which ones they are).
Hearing this, I was a little dumbfounded.
How could this guy not find effective people to join him on one of Wall Street’s best desks? Heck, I would have run through a brick wall to work for this guy after sitting next to him for an hour.
This said, with a confused look on my face, I asked him flatly,
“How is that possible? How did you not have the ‘pick of the litter’?”
He replied,“That’s the thing. We actually did. The problem is it wasn’t a matter of talent or intellect. We were getting the top kids from some of the top schools in the country.”
He explained that the problem ran much deeper. While these kids had plenty of intellect, he found that they were lacking something else. Something much more important.
Rick described how at some point during the past few years, the balance started to shift from these new recruits feeling as if they owed the firm something to a belief that it owed them. The job was simply a short-term pit stop on their way to the next part of their careers. As a result, their effort, enthusiasm, and productivity had deteriorated materially versus prior “classes”. Remote work only accelerated and accentuated this trend.
As I digested this new reality, I asked him how he responded.
His answer was predictably simple — “I looked elsewhere.”
While he continued to recruit from the seven target schools, Rick added seven “non-targets,” only instead of simply moving down the list in the US News & World Report rankings, he chose a different set of criteria.
He targeted large universities across the country with students from a wide range of backgrounds. Within these schools, he looked for those who had put themselves in leadership positions, be it in ROTC, sports, a fraternity or sorority, student government, or the arts, among other things, so long as they had taken ownership of something. Preferably, he wanted to see examples of resilience and persistence in these pursuits. In short, he was looking for kids who had embraced and indulged in everything the university had to offer, all while excelling academically.
After selecting and visiting these schools, his desk hired five analysts from the “non-target” schools and another six from the traditional “target schools”. Then, after these eleven analysts completed their first year on the desk, they were ranked.
Care to take a guess as to how the rankings shook out?
You probably see where this is headed.
The analysts from the “non-target” schools ranked something like #1, #2, #4, #5, and #7, while the analysts from the traditional “target” schools claimed the #3, #6, and #’s 8-11 spots.
The results were so stark that the firm’s CEO approached Rick to see what drove them. Rick’s response was direct and clear — The analysts from “non-target” schools simply wanted it more. They were humble and wanted to learn. They were willing to go above and beyond what had been asked of them. Much like how I felt just talking to this guy, these kids wanted to run through a brick wall for him.
After talking to Rick, the CEO apparently revamped the firm’s recruiting process. Today, each area of the firm is allowed to incorporate a “non-target” school list in addition to their target list. Apparently, the results speak for themselves.
My takeaway?
This country has challenges and the higher education system is near the top of the list. However, one thing that is far from challenged is its vast depth of talented, driven, hopeful, and resourceful young people. The key for businesses looking to hire young talent or investors trying to find the next great company is to seek out and identify these young people and give them the opportunity to shine.
So, what does this look like?
It starts with doing what Rick did — acknowledging that continuing to fish in a few select ponds that haven’t grown in more than three decades probably isn’t the optimal way to source talent anymore. Instead, it means stretching your hiring lens, looking in places you haven’t before, and taking chances on less conventional candidates in order to find diamonds in the rough.
Now, don’t get me wrong. This does not mean disregarding traditional recruiting hotbeds and target schools. That would be like telling an NFL general manager to no longer draft players from the SEC because the talent in other conferences has improved. Instead, it simply means that expanding your hiring horizon should be additive to performance.
At the end of the day, for all the young people out there looking to land their dream job, there is one thing you can do that is fully within your control that transcends where you went to college, what you majored in, what your background looks like, or where you are from. UFC president Dana White said it best,
“Just be a savage. These days, if you are even remotely a savage and you get out there and you grind hard and you want it badly enough, you can run by anyone. It is all out there for the taking, especially in this era of remote work. There has never been more opportunity out there than there is today.”
And for the companies and investors looking to excel and outperform?
Start by finding these savages.