Sorry, but not joining the typical startup for a below-market salary, a handful of options that will likely never pay off, and an expectation that you work 80 hrs a week may be "risk-averse" but it's hardly irrational. The main benefit to working at a startup with those conditions (not all are!) is that you want to start your own company and want to learn and build your network. But even then, a lot of these recent grads would be better off just starting a company now.
In my experience most undergrads are so risk averse that they don't even get as far as making that calculation. The reason most don't go to work for startups is the same as the reason most don't think of starting them: that those alternatives don't even seem real. We're talking about a phenomenon much deeper than calculations of expected value.
I think you're right about the options not seeming real, but I don't know if the reason is primarily risk aversion. I think the majority of CS graduates just don't realise it is an option.
In my university, the big software houses all do serious recruiting on campus. The cream of the crop are generally offered jobs before they graduate (some are also hand picked by the faculty for postgraduate research). The careers office goes out of its way to try and ensure a seamless transition between school and work. In that sort of environment, somebody wishing to work for a startup would have to consciously reject the idea of working for Google/microsoft/IBM/whatever and actively seek something else (and you won't come across most startup jobs on Monster).
I think it boils down to the job offerings being good enough. Microsoft, for example, offer a fancy graduate program with a lot of travelling to interesting places where they certify you in all their main technologies. That training is supposed to seem like an extension of the college life, except it pays well. And its being offered to you before you sit your finals. Just about everybody you know thinks it's a great opportunity. Why go digging for hard to find jobs in companies that might not even exist tomorrow? (Rhetorical!)
Then again, my university is in Dublin, where we have a real shortage of programming talent, a few big name computing companies and almost no startup culture whatsoever. YMMV.
Does that imply that startups are bad at reaching undergrads? It seems like offering good salary, awesome work conditions with smart people, and some equity would compel at least some grads to run the calculation.
Go talk to Dropbox, and ask them if they give below market salaries, options that will likely never pay off, and an expectation that you work 80 hours a week.
But you're right that that's the danger of joining a startup coming out of college -- you have no idea which ones are great and which ones are not.
If some intermediating third party vetted the startups for the students we wouldn't have that problem.
Such an idea has worked in all kinds of problem domains, but in startups founded by college grads YC is the standard. Having the PG stamp of approval is so valuable.
Yeah, I agree that not all startups are this way. But the other thing is that so many of these startups are founded by college grads. Do they really know that much that our recent grad doesn't? Probably not.
I really think that some of the hiring difficulty for startups is that they're genuinely not offering that great a deal for employees.
To say nothing of the fact that if one graduates with a large student debt, taking below market salary on the small chance that you might break even on employee stock options is irrational unto itself.
Sorry, but not joining the typical startup for a below-market salary, a handful of options that will likely never pay off, and an expectation that you work 80 hrs a week may be "risk-averse" but it's hardly irrational. The main benefit to working at a startup with those conditions (not all are!) is that you want to start your own company and want to learn and build your network. But even then, a lot of these recent grads would be better off just starting a company now.