Nov 7, 2016
You'd think the cohort that proudly rejects the traditional script and confidently blazes their own trail (with the occasional assistance of google maps) would embrace entrepreneurship with open arms. In theory, they do. 60% of millennials consider themselves entrepreneurs and 90% recognize entrepreneurship as a mentality. Yet the numbers tell a less "likable" story.
On the surface, the entrepreneurial lifestyle seems tailored to millennials' preferences and skill-sets. They are often defined by their independence, passion, and ambition - all valuable traits when founding a startup. They question the hierarchal nature of the corporate world and seem to prefer a more flat structure where their ideas and efforts can make a tangible difference.
Possibly more important, millennials coming of age in a digital world provided them a unique relationship with technology. This tech savviness that millennials are known and (not very) loved for gives them a distinct edge over previous generations - they are able to identify areas for entrepreneurial ventures in older industries ripe for disruption.
Furthermore, millennials have received more exposure to entrepreneurship, in practice and teaching, than any other generation. To start, they were much more likely to have a mother or father that owned their own business. Once reaching college, they were provided the opportunity to receive formal entrepreneurial training. The number of college entrepreneurial classes has increased by a factor of 20 since 1985.
A strong interest in entrepreneurship combined with massive exposure to entrepreneurial training should equal explosive business creation - right? Not quite. Millennials have created fewer and fewer businesses since they entered the workplace over a decade ago. According to the Kaufman Foundation, the number of new entrepreneurs that are young people is down 35 percent in 1996.
So what happened? To start, millennials were either directly affected, or saw first hand, the consequences of the great recession. This manifested itself in wide spread risk aversion. Although millennials are known to be confident and ambitious, they still place a high value on the safety of a steady salary. To make matters worse, upon entering the workforce they were faced with unprecedented levels of student loan debt in a weak economy. Between 2008 and 2014, student loan debt rose a shocking 84 percent. So while millennials may value the mindset of the entrepreneur, they do not have the capital or nerve to be an entrepreneur. More simply - they talk the talk, but don't walk the walk.
Alas, our future is not set in stone and there are some promising signs that millennials could capitalize on their entrepreneurial potential. Kauffman states that millennials are on the cusp of mass entry into the "peak age" bracket for entrepreneurship. People in their late 30s and early 40s are the ideal entrepreneurs (the average age of a startup CEO is 40) because they have gained enough experience into an industry's pain points. The older millennials are about to enter this bracket, making it the largest cohort at these ages in U.S. history.
One thing is certain - millennials contribution to the entrepreneurial ecosystem will have significant implications for the American economy. With more and more large companies dominating industries, small business creation will become essential to America's place as a world leader.
So what can business leaders do to turn the tides? Many claim that providing millennials with an environment that they can thrive in will foster their innovative potential. If managers can cater to the passionate component of this generation's psyche, millennials will completely revolutionize the way we operate in and think about American business.