Millennials struggle to become self-employed
Age group’s entrepreneurs learn hard lessons — and some are breaking through
Statistically, the millennial generation’s track record of creating successful self-owned businesses is at a historic low.
For this generation, the concept of entrepreneurship is about learning hard lessons to find new ways. Often centered around venture capitalists and other investors enticing them to buy into social media or other digital ventures, they are learning this approach is failing to deliver the promised rewards.
However, there are growing examples of millennials creating brick-and-mortar businesses that emphasize strong community and business values to counter the dominant and negative small-business trends among young people.
WHAT THE DATA SAY
Approximately 65 percent of millennials aspire to start a business or be self-employed, but according to the US Small Business Administration, only 2 percent of millennials in 2014 reported self-employment.
That’s down from 3.9 percent of the same age range in 1988. In fact, the trend is slowing. Millennials are less self-employed than Generation Xers, who were less self-employed than Baby Boomers. And this trend is occurring as entrepreneurship itself is having a three-year small-growth spurt.
Those young people who forgo the world of digital job searching to become entrepreneurs do so with little capital, few connections and few original ideas. Evidence shows that those of this age who grew up trusting information smeared across the vast digital landscape are especially susceptible to pitches that promote pre-packaged formulas as the path to success.
This fact is eerily similar to another era.
The entrepreneur trend was at its highest during the dot-com boom of the 1990s and 2000, as Generation Xers tried to create the next big internet company or find the next big thing.
In 1999, US venture capital firms raised an all-time high, $50 billion. In 2000, that shot up to more than $100 billion. The dot-com burst hit venture capitalists hard, and by 2002, they were raising only $3.66 billion.
Those Gen-Xer entrepreneurs were out of dreams — and back searching for jobs.
Fifteen years after that first boom — the typical length of one generation — venture-capitalist fundraising trends are once again growing. US venture-capital firms in 2015 raised $28 billion, more than double the amount raised in 2010. In the first quarter of 2016 alone, those firms raised $12 billion.
In Europe, China and India, venture-capitalist fundraising also has increased gradually over the last five years. European venture-capital fundraising is up from 3.9 billion Euro in 2013 to 5.3 billion Euro in 2015, says Invest Europe. There were 1,148 venture-capital investments in China in 2013. In 2015, there were 3,445 — more than 2013 and 2014 combined.
So, yes, more people are choosing entrepreneurship. And startup businesses are making more money than in any time since the dot-com boom.
But millennials aren’t the ones succeeding; they just like the idea of it.
The global economic collapse of 2008 continues to plague the millennial generation — those born between 1982 and 2000 — who entered a cratering workforce with limited opportunity and diminishing earning potential. In fact, millennials earn an average of only $34,000 per year.
The American unemployment rate for 18- to 29-year-olds is 12.8 percent, according to the Millennial Jobs Report. That’s much higher than the 5 percent among all American adults. In fact, 40 percent of America’s unemployed are millennials.
The youth-unemployment rate in many European countries is even higher: Nearly 30 percent in Portugal. Nearly 39 percent in Croatia. Forty-five percent in Spain. And more than 50 percent in Greece. Across the board, youth unemployment numbers are in the double digits.
When people are unemployed, they grow disillusioned and skeptical of established systems. In America, only 19 percent of millennials say most people can be trusted. More than 60 percent of millennials in Poland, Greece, Italy and Germany say life is determined by forces they can’t control.
THE PITCH VS. THE REALITY
The lagging trust millennials have in the traditional workplace is among the factors that lead millennials down small-business paths.
Wooed by the idea of entrepreneurism over traditional careers, the ability to dictate when to work and play also motivates this generation to seek alternatives to more traditional work. In fact, this is a big reason why millennials are lured into entrepreneurial trends that are more bluster than substance.
The examples are many.
The ABC network pitch-an-investor television show “Shark Tank” is the most-watched Friday night program among 18- to 49-year-olds. Thanks to its wild success, “Shark Tank” spawned a spinoff, “Beyond the Tank,” which averages another 2 million to 2.5 million viewers each week.
“Shark Tank” is a slice of the marketing pitch sold to disillusioned millennials. They’re increasingly getting a heaping dose of two kinds of temptation: The “You Can Do It!” talk connected to “Everyone gets a trophy”-style millennial entitlement, and the “Live For the Grind” talk connected to the alpha instinct of millennials spurned by the failed global economy.
Here’s the pitch millennials get: Forget being an overqualified millennial, working for a mission you don’t respect. Start your own business.
Thanks to the growth of investing and venture capitalism, and to the wildly unique and practically unattainable success of tech avatars like Facebook’s Mark Zuckerberg, the reality of being a successful entrepreneur has been watered down and turned into a sugary fix spoon-fed by leeches. They try to make millennials believe anyone can be successful. And these leeches use either happy-go-lucky language or abrasive alpha-male messaging to get unprepared millennials to “follow their dream.”
SOCIAL MEDIA STILL RULES
First, those in the happy-go-lucky crowd: On social media, they’ll coach millennials to be better marketers with words like “ninja,” which ignites urgency and a call to action.
And an entire cottage industry of retreats and contests props up entrepreneurship to millennials as a coming-of-age decision. The message: Change your life by joining the entrepreneurial world! And the first step is to join a camp to meet people just like you!
Startup camps, everywhere from Switzerland to Canada, are sold to early stage entrepreneurs who want to know how to pitch, who to work with, and sometimes, what to do. Some of these wannabes have no clue what they even want to pursue.
These startup camps are often actual summer camps. The Happy Startup Summercamp is an annual event in England in which less than 100 entrepreneurs gather on 300 acres to talk business and roast marshmallows.
“This is your tribe,” the camp tells interested parties. Yes, people who have an idea: You finally have a place to go.
For those who need to treat life decisions like boxing matches, a more abrasive brand of this type of marketing also helps millennials feel entrepreneurial. “Shark Tank” works along these lines, as do websites that prefer to shout at people with buzzwords like “hustle” and “grind.”
The website Addicted2Success.com plays like a poor man’s Buzzfeed.com for wannabe rich kids, offering vague advice to entrepreneurs. One piece is headlined, “Why You Should Use Your Intuition And Chase Your Destiny To The Ends Of The Earth.” At TheRiseToTheTop.com, which offers webinars for hopeful entrepreneurs, terms like “douche-a-saurus” are tossed around. If you succeed after taking a webinar, you’re “crushing” it.
Then there’s Side Hustle Nation, which says it aims to help people find financial freedom. One of its top guides shows how to quit your job in one year. Maybe it’s working: More than 3 million Americans quit their jobs in December 2015, the highest number recorded since before the financial collapse. Moreover, 66 percent of millennials plan to leave their jobs by 2020, and 44 percent of them said they’d likely quit their jobs within two years.
Finally, a new hook is emerging: Entrepreneurship is just like dating. On an app called Unicorn, entrepreneurs create profiles. Just like the dating app Tinder, they swipe right to further a relationship with a potential investor. And on PIF — short for Pay It Forward — entrepreneurs create profiles to connect with other entrepreneurs.
These social networks, websites and summer camps may seem like a more socially advanced way to connect people with similar interests, but they’re merely lazier than the trusty alternative: networking in public, raising capital and pitching original ideas to anyone who’ll listen.
HOW THE TIDE WILL CHANGE
Beyond the data that reflect a disturbing success rate for self-employed millennials are growing examples of young entrepreneurs who get it.
This group of aspiring business leaders are learning how to use their digital, tech and social-media skills to augment business ventures that emphasize community connection, authenticity and a human touch. They are building businesses — from small high-tech operations to farm-to-table markets to clubs and restaurants — that place a premium on tying core values to profit.
This new variety of millennial ontrendpreneurs™ is not only building a foundation for successful business models, they espouse values that enhance the quality of life in cities and communities where they do business.
And while raw data do not yet reflect this evolving trend, there is a growing indication that a powerful counter-trend to the downward spiral of millennial entrepreneurism is under way. TJ