Many twentysomethings talk about feeling undervalued by corporate America. Alexis Ohanian and Steve Huffman are doing what many others are doing to solve this problem: starting their own company. At universities like Harvard and Carnegie Mellon 30-40% of graduates end up starting their own business after five years, and the trend is poised to go up.

The entry-level job inherently undervalues someone who is bright and driven, according to Paul Graham, partner at Y Combinator, a Cambridge-based venture capital firm that funds startups almost exclusively from very young people. He sees entrepreneurship as the great escape.

“For the most ambitious young people, the corporate ladder is obsolete,” says Graham. For the last hundred years everyone started out at the bottom. Even if the candidate held extreme promise, corporations put the candidate as a trainee on the bottom rung so he didn’t get a big head. Graham writes, “The most productive young people will always be undervalued by large organizations, because the young have no performance to measure yet, and any error in guessing their ability will tend toward the mean.”

So, if you are smart and energetic, you might be better off working for yourself. Ohanian and Huffman started their own company before they even graduated from University of Virginia. Today they are twenty-two, and running their company, Reddit, out of their Cambridge apartment. Huffman turned down a job offer at a software company in Virginia so that he could write the software for Reddit, which is a little like social book marking and a little like RSS feed: Think “the five most emailed Boston Globe stories” only not just the newspaper but the whole wide web.

The value of people in their twenties is touted fervently at Google, a company always on the lookout to buy companies from young entrepreneurs. On a blog entry about a conference for entrepreneurs in their early twenties, Chris Sacca, principal for new business development at Google wrote, “I was instantly struck by the sheer energy of the crowd. No one was running off to check in with their assistant or jump onto a mindless conference call with sales finance.”

Graham estimates that a top programmer can work for $80,000 a year in a large company, but he can be 36 more times productive without corporate trappings (e.g. a boss, killed projects, interruptions) and will generate something worth three million dollars in that same year if he is working on his own. Before you balk at those figures, consider that Ohanian and Huffman started their company in June 2005 and by November 2005 they received a buyout offer from Google, (which they declined in favor of continuing to build the company on their own.)

But not everyone is sitting on a great idea for a company. For those who eventually want to start your own business — once your find an idea — use the time beforehand to learn the right skills. Jennifer Floren, CEO of Experience and an entrepreneur herself, recommends going to a small company “where you will usually be able to see first hand what each part of the company does. At a big company you won’t get such wide exposure.” Also, “look for opportunities to be creative or take a leadership role, two good types of experience for an entrepreneur to have.”

If you have spent some time in the workforce, consider becoming a consultant, which essentially is making a business out of yourself. “You should have at least five years of workplace experience before you go on your own,” says Laurie Young, co-principle of Flexible Resources, “because you are offering your experience.” Also, you need marketing skills to sell yourself.” It takes a certain kind of talent “to show people you have skills they can use.”

Alexandra Levit worked in public relations for Computer Associates and then struck out on her own, as a consultant in publicity and marketing communications. In terms of making the transition, Levit advises that you “try lining up a few jobs that you can have before you take the leap,” and be prepared to spend “about 30% of your time marketing yourself.”

Levit provides a snapshot of reality for all entrepreneurs when she says, “Don’t expect the drawbacks to be only financial. You need a lot of self-discipline to sit down in your home office and work without any external pressure. Working for yourself means you’re responsible for every aspect of the business,” and this means, ironically, even the boring, entry-level job that you would have done in a big company.

Ohanim can attest to this, too: “I am spending a lot of time right now doing our taxes. We merged with a company and they kept terrible records.” But, he says, “I really like the notion of not having to look to a superior, to have independence and be doing the entrepreneurial thing.”

20 replies
  1. Dan D.
    Dan D. says:

    From the article, …recommends going to a small company "where you will usually be able to see first hand what each part of the company does. At a big company you won't get such wide exposure."

    Couldn’t be more true.

  2. Resona
    Resona says:

    Many companies prefer startups almost exclusively from very young people and it is a good opportunity for those freshers who are looking for a good entry level for their career development. Some cases it has proved that the corporate ladder is not essential for the most ambitious young people to establish them in the society. If you are confident, hard working and intelligent then one day you will be able to achieve your goal. All these show a clear picture that always corporate ladder is not necessary to move up.

  3. Zinco
    Zinco says:

    We can't deny completely the support of good corporate ladder for our career development but always corporate ladder is not essential for talented people to prove their Excellency. Hence, if you are smart and energetic, you might be better off working for yourself. You need to be confident and intelligent enough to show outstanding performance. I also agree that once you find an idea, use the time beforehand to learn the right skills.

  4. The Coach
    The Coach says:

    It all depends on what makes people happy. If someone prefers to work on their own then they hard work is rewarded one way or another. If you work hard and smart you are bound to make it one way or another.

  5. Warren
    Warren says:

    I have worked for large corporations in the past and am working for myself now. I know that it not only feels better to not have to deal with having a boss but also the lack of office politics is a great motivator. Being in my late twenties I am really enjoying being self employed. It has its risks though and it is imperative that these risks are calculated and a self employed person is prepared appropriately.

  6. matchmaker
    matchmaker says:

    This year, I'm just not quite sure what my big resolution is going to be, but traveling more, taking an international cooking class and baking more bread (something I've put on the back burner a bit) are definite goals of mine. I'd also like to hold a few more contests on Baking Bites with giveaways for all of you readers. Beyond that, I'll have to make them up as I go through 2010!

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  8. Asteamer Mopsad
    Asteamer Mopsad says:

    The ladder is not the only way up, but I believe that the ladder is a big help to get us through to the top. A lot of young people nowadays are really working for themselves. Young people are usually energetic and smart and has lots of fresh ideas at hand. Corporate world must help the young to cultivate their ideas and enhance their skills. And for those that would want to start their own business, it is important to get the idea and learn the right skills for the plan to be executed precisely.

  9. Woody Smith
    Woody Smith says:

    Starting a new endeavor, especially on business field, isn’t always an easy thing to do. One, who is vibrant, full of ideas and enthusiastic, still experience hardships in between, more often than not. All of these are experience whether you are working for yourself or for a corporate world. There is no easy way to success. Strive.

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