My Take: Get Rich Quick and Become an Instant CEO

By Jane Alexander, Deputy Editor

Several years ago in this column (“Secrets Revealed,” pg. 6, Maintenance Technology, Sept. 2010), I wrote about an encounter I had with a freshly minted mechanical-engineering grad sitting next to me on a long flight from somewhere to somewhere. I had asked my young fellow traveler—who happened to be returning home from a couple of fun-filled weeks at the beach—what he planned to do with the degree his parents had, in his words, evidently sacrificed greatly to fund. “Get an MBA,” he proudly announced, “start and run a business.”

He was clearly tanned, rested and, in his own mind, ready to go. I was appalled, given the facts he shared with me regarding the five years he spent in engineering school: He had not been part of a co-op program, interned or even visited an actual plant during all that time. Nor, as far as he could recall, had he actually put his hands on a real compressor, pump, motor, valve, bearing or seal. The types of courses he was not required to take were also troubling.

I remember thinking at the time that someone who was excited about running a business—in this case, an engineering-based one—but was so ill-prepared to do it must be an anomaly. Theoretical “book-learning,” after all, may have some limitations in the real world. Not so fast. My young friend from the airplane may have been on the cusp of a new movement.

According to a Planet Money piece entitled “Seeking a Fortune through Search Funds,” by Ashley Milne-Tyte that aired May 5 on NPR’s Morning Edition program, some college graduates have begun turning up their noses at good job offers in favor of what they consider a faster track to success. They want to be CEOs, “not in 15 years, but now.” To do it, they hope to convince investors to fund their salaries and expenses while they look for companies that the investor(s) will buy and let the graduate(s) run. As Milne-Tyte’s story points out, these pitches are working more frequently than some of us might imagine. In fact, the resulting arrangements have become a real and growing “corner of the investing world.”

Such investments are known as search funds, “and there are plenty of investors out there looking for young people to invest in.” One of them is Rich Kelley, of Search Fund Partners. The process works like this: “These young guys (and they are nearly all guys) are called searchers. They look for solid companies with good earnings potential.” Kelley says eight or 10 investors like him each hand over about $30,000. “Added up, that covers a salary and travel expenses for up to two years while the person hunts.” Overall, it’s less than what Kelly would pay “a full-time employee to scout for juicy deals.”

Clearly, the young searchers are doing all the work. If they’re successful, the investors get a cut and a chance to invest even more. The downside, however, is if a searcher never finds a company and burns through his/her money.

Coming from a long line of entrepreneurs, I have enormous respect for anyone with the passion, stamina and sweat it takes to build a successful business. To my way of thinking, it’s a parental responsibility to foster ambition and drive in our children. Raising my own son, I never let a day go by without reminding him he could do anything he wanted to do—and change the world while he was at it.

So where will the “get rich quick/instant CEO” zeal of the business-school grads referenced in this radio story actually take them? And, if this cockamamie approach to real life becomes more widespread, how will it impact U.S. businesses—including our engineering-based companies and operations—in the future? I wasn’t the only listener with questions.

To listen to and/or read the full transcript of this Planet Money story, please click here. I also encourage you to read through some of the many comments associated with it. Then, let me know what you think about the issue and how it applies to our industry. MT

jalexander@atpnetwork.com