Younger Generation Engaging Less in Entrepreneurial Effort


I like this.


The trend is clear.  Younger people used to start a lot more entrepreneurial type businesses in years past than they do today.  Only 3.6% of businesses today are started by people less than 30.  In 1989, it was 10.6%.  However, the cost to start a business has gone down dramatically.  That doesn’t make sense if we think about it in terms of economics, so what else might be going on?  I went into business for myself at age 26.

I’d like to say this trend is based in one country, but it isn’t.  It’s a world wide trend.  If it was based in one country it might be an easier problem to solve-or you could point out inefficiencies inside that country that were causing the problem.

Let’s look at some easy answers.

  • College debt
  • Bad economy
  • Challenge to raise money
  • Poor educational systems not teaching them the right skills

It’s possible that college debt is a problem.  We have over a trillion in college debt on the books.  At the same time, more and more people are going to college and the cost of an education has skyrocketed.  Higher levels of educational accomplishment should encourage, not discourage risk taking.  If we magically wiped away 100% of all the college debt, I don’t think we would see a rise in entrepreneurial enterprises by younger people.

Economic numbers seemingly are on an upswing.  We have a strong bull market.  The last time that we exited a tough recession, it was different.  Government spending as a percentage of GDP was a lot less, and the heavy hand of government regulation and taxation was lighter.  At the same time, it’s entirely possible that younger people are having an easy time getting jobs in big companies so they don’t have to startup their own.  That wasn’t the case in 1983.

Raising money for startup has never been easier.  Crowdfunding, the proliferation of angel groups and access to capital is a lot easier today than it was in 2000.  Compared to when I came out of school in 1984, it’s not even the same world.

It’s clear that our educational system in America is failing.  It’s not just the inner city and rural schools.  There are plenty of suburban school districts that suck.  Our government mandated educational system cannot keep pace with change-and has a different agenda than getting people ready to be productive members of society.

I want to offer up some different ideas though.  After observing my kids, and their peer groups, I have some insight although I’d be the first to agree that it’s not rigorously objective and ready for an academic paper.

Other possibilities:

  • Social media and conformity
  • Fear of mistake or misstep
  • Channeled or forced thinking
  • Worrying about the wrong shit

Social media turns a lot of people into conformists.  Entrepreneurs by definition are not conformists.  We like all the same stuff, and social media turns us into a herd.  There is safety in the herd.  Kids today are less risk loving than their parents.  They have been coddled.  “Everyone gets a trophy” doesn’t play in an entrepreneurial world where it’s based on merit and you eat what you kill.

Kids today have a lot of fear.  They were small when 9/11 happened.  They were pre-teen to late teen when 2008 happened.  The 24 hour news cycle and the internet put it in their face each and every second of each and every day.   Many of them do not know a time when the world didn’t have some sort of violent skirmish happening in one country or another.

One data point, my daughter told me I was doing Instagram wrong and that people would not like me because of the way I was doing it.  She also said my caption on a photo sucked.  If there is that much going on in a child’s brain over uploading a simple photo and captioning it to a social media site, then it might be symptomatic of fear of making a mistake in everything.

One misstep on social media is there forever.  Compare that to all the social faux pas I made in my life that were confined to smaller groups.  Most of them are distant memories-but with the internet they’d be searchable for life.  Entrepreneurs cannot be afraid to make mistakes.  They are guaranteed to make them.  They just need to make sure that they aren’t fatal.

Many times, we try to channel entrepreneurs.  Social entrepreneurship is big.  Liberals have embraced it.  It’s a double edged sword.  I agree, the world’s biggest problems will be solved by entrepreneurs not governments.  But, one thing I have seen is people saying, “donate all your profits”.  Or, solve this exact problem.  Entrepreneurs discover problems.  They usually aren’t directed to them. That’s one reason a good VC will always ask, “How did you get the idea for this business?”  If the problem is big enough, they will earn outsize profits.  They deserve them for solving the problem.  I maintain that anytime a business creates customers and earns cash flow, it’s solving a social good and doing social good.  Instead of channeling entrepreneurs, we need to embrace the classic liberal arts educational system and teach people to critically think about their world.  They will find problems to solve.

I saw the angel in the marble and carved until I set it free.” -Michealangelo

As soon as constraints other than moral ones are placed on creative thinking, the process gets muddled.

In our society today, we spend a lot of time worrying about the wrong shit.  Here is the best example I can give.  I was in the audience at a Financial Technology meet up.  There was a presentation and then Q+A afterwards.  The first questioner didn’t ask a question relating to the presentation.  She said, “As I look around the room, there are a lot of people that don’t look like me.”  She was African American.  Admittedly, there are not a lot of African-American women in finance, corporate, entrepreneurial or anywhere else.  She walked into the room with a chip on her shoulder.  When you do that, it clouds your judgement because your perception is skewed by the chip that you carry.  My first thought when she made that statement wasn’t how different she was-my first thought was she and I both had an interest in financial technology and we needed to find common ways to work together.

We are inundated today with all kinds of social bullshit that is really not relevant to anything.  That may be because a lot of people go to college and major in sociology instead of a hard science, business or math.  Entrepreneurship doesn’t have room for social bullshit.  Great entrepreneurs don’t see color or gender, and great entrepreneurial ideas are neutral when it comes to that stuff too.  Terrorists use Twitter to communicate just as much as the people who are fighting them.

What’s the solution?  It’ complicated but it starts in the home.  It starts with the way you raise your kids to appreciate risk taking.  That’s too big a topic for one blogpost.  But, if we don’t solve this problem it leads to long term problems down the road.  Companies like Google ($GOOG) and Facebook ($FB) couldn’t have been created inside most large corporations.  Large partnerships and agencies don’t have the time or resources to do things like that.  Those new ideas propel society forward.

The present day is unlike any other time in human history.  We are at the advent of a modern day Renaissance.  The potential for humans to make a difference and create new things that will revolutionize different business silos is there.  You just have to look inside yourself and find the courage to go and do it.

Younger Generation Engaging Less in Entrepreneurial Efforts

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