Something astonishing is happening to the market for young, smart labor. The luster of big prestigious firms, particularly on Wall Street, has dimmed: “The End of Wall Street as They Knew It,” goes a recent New York Magazine headline. A few months ago at Davos, CEOs complained about the brain drain affecting their companies.
Where are all these people going? Increasingly to start-ups, which seem to have captured the public imagination, particularly among millennials (ages 18 to 29). In an opinion piece, Deloitte CEO Barry Salzberg says that millennials are increasingly thinking of finance, consulting, and corporate jobs as a “a tragedy of wasted minds.” Instead, they want “a career that actually matters” and “to know how they will make a positive difference in the world if they join your business.” According to a recent PayScale survey, Entrepreneurial Studies is now one of the most popular majors among this generation. And so, despite lacking resources, brand name, and job security of larger firms, start-ups are incredibly alluring — in fact, they get away with paying average salaries that are often 30 percent below market.
How do start-ups accomplish this? We’ve noticed two main trends. First, start-ups have mastered the art of marketing themselves effectively toward millennials (many are run by them). Job descriptions and career pages at start-ups tend to emphasize meaning and impact. For example, a recent job ad by the dating start-up Grouper (which you can see online here) promises that work there will let you make a “dent in the universe.” The implication is twofold: that the world will benefit from your work, and that there’s personal glory in it for you.
At Amicus, a different start-up that uses technology to help non-profits raise money more effectively, the first thing candidates see when they reach the careers page is that a cow will be donated in their name if they’re selected for the job. This appeals to recent graduates’ sense of humor and humanitarianism.
Start-ups also carefully choose language that imbues their roles with meaning and excitement. A few years ago, it was trendy to look for people who were “coding ninjas” and “rock stars.” Today it’s “hackers” and “hustlers.” One of our clients advertised a position at their recently opened New York office as “‘The Wolf’ from Pulp Fiction.”
But start-ups do more than just good marketing. A recent graduate put it best when he told us he wanted to work at a start-up because, “I’ll be managing a budget from day one and I’ll be doing something I actually believe in.” At start-ups, talented youth are given big responsibilities right off the bat. Whereas corporations often require a slow and painful process of “climbing up the ladder,” start-ups aren’t afraid to give young hires lots of ownership.
Start-ups are also increasingly geared at solving social problems near and dear to millennials’ hearts. Amicus is one great example, among others like Silicon Valley’s TenderTree. Even start-ups that aren’t directly working on social issues tend to emphasize that they are doing something to improve the world. Airbnb, which allows users to rent rooms from other users, emphasizes that it is creating a more unified community and helping to build relationships through its service.
Of course, in an economy that is still very much in recovery, most recent graduates are lucky if they can get a job at all. It is only the most talented and sought-after grads that have the luxury of choosing start-ups over Wall Street and corporate jobs. But the trend here is clear: Though Goldman Sachs and McKinsey were the top choices for Ivy League graduates five years ago, tech start-ups have now taken that place.
In order to avoid being left behind, large corporations would do well to listen to the millennial ethos that emphasizes change and personal impact. Some specific steps these corporations should take:
- Weave company values and impact-driven language into recruiting material, and overall company messaging.
- Emphasize the company’s vision and mission to employees on an ongoing basis. Involve them in strategy conversations to make candidates feel they are a part of something they can impact.
- Offer ample room to grow, and some leeway for employees to pursue their own ideas — like Google’s “20 percent time” policy.
- Get better at identifying and promoting young talent early on. They likely won’t wait around for more than a year for that first promotion.
- Consider offering sexy (often low-cost) perks, like start-ups do (e.g., free massages or an Uber car allowance). If this isn’t possible at the corporate level, give managers leeway to bestow these perks on a one-off basis, as rewards for exceptional work.
- Offer equity in addition to salary. Millennials like to feel as though they have skin in the game.
Unless corporations adapt their recruiting practices quickly, we will continue to see a brain drain away from corporations and toward start-ups — a trend that over the long term means the beginning of the end for the large company genus.
The brainchild of two Stanford students, 
Chinese company 
