The recession model for an entrepreneurial economy.
Recessions have always been a breeding ground for entrepreneurship. Studies showed that the great showed an increase of business filings reaching as high as 13% national growth between 2007 and 2012. However, I believe that Millennials are particularly posed to be one of the most entrepreneurial generations of all time due to a perfect storm of factors that contribute to the attitude of the generation as a whole.
- Predecessors laying the framework for entrepreneurship for the half-century before, making it the new definition of the american dream, and resulting in more cumulative wealth than ever seen in global history.
- The tools produced by the previous generation made starting your own business easier than anytime in history. In fact, the beginning of the great recession actually was at the exact time that barriers to entry of starting a new business were at their all time lowest in history.
- The recession eroded trust in large corporations and the government as a reliable means of sustaining livelihoods, and created an attitude of desire to take things into our own hands.
- every major recession typically results in entrepreneurship by nature.
These combined factors have produced a generation that has entrepreneurship infused into its bones and dreams, and is likely to result in the largest boom of creativity yet witnessed on earth.
Even those Millennials who are not founders of new companies, are gravitating toward working in startups and small businesses that have a mission that they share and a culture that they love. Because of this even those people who do not particularly wish to start their own business are resulting in the production of human capital that is necessary to fuel the more ambitious entrepreneurs of the generation, and push them toward success in the Millennial market as a whole.
The observations of recessions resulting in creative economies is a historical pattern that has repeated itself many times in history.
Perhaps the most notable historical example of this is the recession following the English Civil war in the 1640s, which continued through the 1650s. The recession that was caused after the English civil war was largely self inflected by the Oliver Cromwell, and his policies that were largely dictated by his personal faith, and not by sound economic reasoning. However the effects were the same. After his victory over King Charles II, he was appointed Lord Protector of England (King in all but name). In so doing he confiscated nearly half of the lands and titles of most of the english nobility, and exiled them out of London.
Oliver Cromwell, mismanaged the finances, causing the country to go into a deep depression, meanwhile outlawing everything from music, art, plays, and even christmas.
Here are the commonalities between 1649 and today.
-Highly educated people are unemployed, and don’t have many prospects. While they’re not starving, they don’t have much to do.
-They gathered together and formed social networks. In the 1650s these networks were in trade, fraternal and social clubs.
-As a result of the above two conditions great advancements were made science in science philosophy.
-When the depression was over, (for the enlightenment it was the return of Charles II, the dead kings son), liquidity returned to the people with the ideas, and they were able to form businesses, finances their inventions, and england saw the largest and most diversified period of growth in its history.
The largest network of thinkers, and scientific thinkers rose up during the time of the Commonwealth, and included names like Thomas Hobbes, Isaac Newton, Christopher Wren, Robert Hooke, and John Locke.
When Charles II returned, he used complex loan systems between himself his cousin, Louis 14, and their cousin, William of Orange in Amsterdam, in order to finance a financial boom in England, that was used to finance the Royal Society, which was the earliest prototype of a national institute of science, and also served as a technology incubator, even though the idea of the corporation, and especially venture capital had hardly begun to be imagined. The result was the definitive end of the dark ages, and the beginning of the period known as the enlightenment.
We can see the same model playing out once again in our post recession economy. However, today our social networks allow people to exchange ideas faster than ever, the foundational technology allows for nearly instant innovation and testing through 3d printing, easy to build web platforms, and the internet allowing for real time peer to peer collaboration.
One of the biggest questions about entrepreneurship is often “why” especially if there are easier, safer, and more secure options for success. While sometimes we are forced into entrepreneurship, more often than not the recession provides the opportunity for innovation by freeing up the time of the thinker. However, there are additional factors that are very influential in decision to be an entrepreneur:
Often the biggest reward is seeing your contribution
We’re willing to trade money and comfort in the short term in order to be part of the future. In 2009, my entrepreneurial friends and I would work our asses off day or night, to assist in fashion week’s, trade shows, startup ideas, and nonprofits. We are so used to doing work on the side that we’re not being paid for. Sometimes it is for the experience, the education, or the chance to “get in at the ground level.” These are intangibles However we have an entire culture that understands that the best ideas won’t get you paid right away, if ever, but we still get richer for it.
Normally these projects relate to our passions. We’re not expecting for the big brake to suddenly happen overnight, we are not expecting to be picked up and then suddenly be a super star. Or to get a big raise once the corporate gods recognize our efforts.
Our economic values center around:
- Self expression: Many people have said that the Millennial generation desire a work/life balance. The evidence couldn’t point further from the truth. In fact, work is an essential part of a Millennials life. The average Millennial looks for work to be a contributing factor in self-fulfillment. We want to do things we are passionate about with people we like being around. Most of all we want to contribute to a bigger idea, and feel that our talents are used and appreciated by our team and by our the world in general. While this drives most entrepreneurs, it also drives the teams around them and inspires innovation within the startups and results in continued innovation, which is necessary for any company to survive in the new economic model of the Millennial market.
- Independence: Just like social networking, and leaning on the reviews or opinions of friends, there is a generational mistrust of “systems”. Rather a Millennial would rather know the person who controls their salary, and the team as a whole, so they can gage trust. If not the Millennials would rather have direct control of such things themselves, and thus be the Entrepreneur himself.
- Anything can work: There is a spirit of defiance that is part of their resilience. The very idea of the “hacker” generation is centered around this. Hackers are broader than just people who break into a website or software for malicious purposes, but rather it is the idea that anything can be understood, and modified in order to server a better purpose. Perhaps it was sesame street that told us “you can be whoever you want to be” Or perhaps it was watching the example of the innovators around us that has just rubbed off, regardless the mentality of “I can figure this out on my own and make it even better” is one of a trademark pride of the Millennial entrepreneur. We are the generation of “self-made experts” if we don’t know how to do something, we’ll look it up on youtube, then if we feel really cocky, we’ll master what we learned, and post elaborations on the concept produced.
- Might as well: This mentality is related to the desire for experience. When I was at Bellevue Community College, and transferring to university, I included Princeton, Yale and Brown in my applications. Never mind the fact that they only accept a small handful of transfers every year, one of my greatest fear is not giving it a try and wondering “what if” for the rest of my life. I believe that our generation is plagued by the fear of not giving things the old “college try”. Hell we love a challenge.