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Start-Ups Aren't Cool Anymore (theatlantic.com)
A lack of personal savings, competition from abroad, and the threat of another economic downturn make it harder for Millennials to thrive as entrepreneurs. From a story: Research suggests entrepreneurial activity has declined among Millennials. The share of people under 30 who own a business has fallen to almost a quarter-century low, according to a 2015 Wall Street Journal analysis of Federal Reserve data. A survey of 1,200 Millennials conducted in 2016 by the Economic Innovation Group found that more Millennials believed they could have a successful career by staying at one company and attempting to climb the ladder than by founding a new one. Two years ago, EIG's president and co-founder, John Lettieri, testified before the U.S. Senate, "Millennials are on track to be the least entrepreneurial generation in recent history."
Some of the reasons have been well-documented. The romantic view of entrepreneurship involves angel investors and venture capital funds, but in fact, the ordinary entrepreneur is more likely to fund a start-up using personal savings -- something underemployed Millennials simply could not build as they entered the workforce during or in the immediate wake of the Great Recession. Funding from friends and family is the next most common source, but this personal network could not help much during the most recent economic downturn, when so much home equity was underwater. Student debt worsened the underlying economic problems. According to a report by the Federal Reserve Bank of New York, between 2004 and 2014, the number of student borrowers rose by 89 percent.
Lately, though, it seems that even those who might typically have access to other forms of funding, like venture capital, are having a hard time getting investors' attention. As Matt Krisiloff, a former director at the Y Combinator start-up accelerator in Silicon Valley, tweeted, "Start-ups are a lot less cool than they used to be." Michael Sadler, an economist at the University of Texas at Austin, is concerned about the rising concentration of start-up investment in just a few super-performing regions such as Austin, New York, and Silicon Valley. As with American politics, it appears the geography of U.S. venture capital and economic growth has become increasingly polarized.
Some of the reasons have been well-documented. The romantic view of entrepreneurship involves angel investors and venture capital funds, but in fact, the ordinary entrepreneur is more likely to fund a start-up using personal savings -- something underemployed Millennials simply could not build as they entered the workforce during or in the immediate wake of the Great Recession. Funding from friends and family is the next most common source, but this personal network could not help much during the most recent economic downturn, when so much home equity was underwater. Student debt worsened the underlying economic problems. According to a report by the Federal Reserve Bank of New York, between 2004 and 2014, the number of student borrowers rose by 89 percent.
Lately, though, it seems that even those who might typically have access to other forms of funding, like venture capital, are having a hard time getting investors' attention. As Matt Krisiloff, a former director at the Y Combinator start-up accelerator in Silicon Valley, tweeted, "Start-ups are a lot less cool than they used to be." Michael Sadler, an economist at the University of Texas at Austin, is concerned about the rising concentration of start-up investment in just a few super-performing regions such as Austin, New York, and Silicon Valley. As with American politics, it appears the geography of U.S. venture capital and economic growth has become increasingly polarized.
VC folks like to get a return on their investment and lately, tech hasn't done so well. It's business.
They are a high risk and long term investment.
For every Google there are thousand failures all from energetic people who believe that they have the next big thing to change the world. If you are going to invest in a startup vs an established company, you need to get past the flash and focus on the business plan, income, and market share. Opening a Deli next to the new Amazon warehouse may bring in much more money then trying to use the latest AI and other buzzards to add synergy to the creative personal to streamline business processes, and make teens flock to it.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
The article talks about millenials as business owners, but then goes on to talk about "startups" which are not really thie same thing. When people talk about "startups", they are talking about the kinds of business that are funded by Angel investors, VC, and the like, which are formed with the hope of one day becoming a public company or being bought by one. These days, such business are usually in the tech industry or some offshoot thereof.
But the vast majority of small-businesses are just that and always will be. We are talking about things like restaurants, dry cleaners, auto repair shops, and the like. The fact that young people aren't forming small business enterprise has little to do with anything happening in silicon valley or other tech centers.
multiple studies have already shown that Millenials are no different than any other generation in how hard they work or what they want. The only major difference is they came of age in the 2008 market crash and that they're saddled with over $1 trillion in student loan debt.
Every generation likes to talk about how lazy the next one is. It's a narrative pushed by our ruling class to keep us at each other's throats while they rob us blind. Along with racism and classism it's a key strategy the ruling class uses to maintain power and wealth inequality while being about 1% of the population. I really wish that here, now, in 2018 with the power of the internet, we could get a majority of people to spot this pattern and start pushing back against it.
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and the general consolidation of power that's been going on for about 30, 40 years now.
I think it was Zuckerberg that made this point, but the next generation of billionaires will likely live into their 150s and be productive for most of that time. Most of the tech that keeps them living that long will be too expensive for the working class too.
If you think it's hard to keep wealth inequality and the power gap that includes in check now wait until the aristocracy lives 30-50% longer than you and I do.
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Unfortunately paying for all those things, socially beneficial though they may be, means that they don't have spare cash to invest in start-ups.
http://www.geoffreylandis.com
I don't think age is a major factor here. Many young people are disciplined enough to keep the books, know the product, and deal with people. But they are just as likely to screw up as an older person starting their own business. And sometimes the older person will bring along their baggage which will counteract experience. Such as yelling at employees, or just bringing a cloud of depression to a company, or just low energy. It really is 6 on one hand and half a dozen on the other.
However the Young CEO use to be cool, because the technology was new, and it was easier to find young wiz kids who know how to program, compared to retrain an engineer with 30 years experience with electronics.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Yep, more that they see most small businesses are overwhelmed by big chains.
VC may also be taking a dive, but by number of people by far more are involved in those other sorts of businesses.
XML is like violence. If it doesn't solve the problem, use more.
It's not the amount of time a start-up takes, it's the risk. A start up is a long shot. You might get rich, or you might spend years going nowhere. Risks are taken by people who can afford them. Fewer people can now.
Your ad here. Ask me how!
Anybody wanna buy some Pets.com stock?
It's not vision that's lacking it's money.
I still need to eat, sleep, pay for rent, etc.
Now on top of this you think I can afford to start a big business?
No. The money isn't there.
I'd gladly work for $30-40K if it meant I could start a decent business (v.s. my expected $80K+), but starting a business these days means making negative pay. Which is dumb no matter how you look at it.
Everyone wants to keep their nest egg secure. Owning a home is a first priority, starting a business comes after. Nobody wants to be out on the street because the business fails.
The lack of ability to safely start a business without the risk of going personally bankrupt and homeless if it fails is a good discouragement towards starting a business.
Startups are great, but they should have a real product, not just the latest fad app. Advice: learn a trade first, whether it's engineering, medicine, law, plumbing, electricity, or science. Then use your experience to start your own company.
Of course, you might be a unicorn with a brilliant idea just out of high school, but don't count on it.
" threat of another economic downturn make it harder for Millennials to thrive as entrepreneurs. "
Not to point out the obvious but economic downturns have a tendency to wreak havoc on everyone, not just Millennials.
( Welcome to the real world btw where things don't always go as expected. )
ACTUALLY starting a business is fucking hard: You risk your OWN money* as well as a shit ton of time, sweat, and (more or less) your family, relationships, prime working years - all for something you "hope" will work.
This is essentially what Marx got *completely* wrong, by positing "capital" just existing ex nihilo, instead of recognizing the massive amount of wealth that was invested in all those businesses that didn't succeed. By discounting the 'red in tooth and claw' investment carnage that happened so that the (current) businesses exist, one hand-waves away essentially the entire justification for why business owners are ENTITLED to make more than the downtrodden wage slaves they employ - it is that disparate result that incentivizes people to take the risk to found businesses in the first place.
But I wouldn't say that Millennials are necessarily perceiving it wrongly; as much as that might make their elders uncomfortable. The fact is that capitalism as is practiced in the US isn't really much like capitalism; it's "capitalist" on the up side, but socialist on the down side. (When in fact, capitalism like evolution ONLY advances by the death of noncompetitive entities.) Why found a business, if every buggy-whip-maker you are putting out of business is only going to go on the federal protective dole ensuring that the poor devils never actually fail?
If there's no ability to eliminate your competitors, there's little incentive to jump into the competition.
*Kickstarter is bullshit - and closer to a religious donation than investment. The idea that people are sinking money is only working by the principal of distributed risk, with the interwebs making the distribution part easier; if you can convince 10 million people to each 'risk' $10 with you, that is in some ways a lower bar than getting a handful of VC funds to each invest $25 million in your idea.
-Styopa
Millenials own MacBooks and iPhones, not homes.
Going somewhat OT but I wonder how many start-ups of back in days were really start-ups? I remember many of these "entrepreneurships" had only one customer (not in first year but year after year) such as Lockheed, Tandem Computers, Rolm, etc.
mfwright@batnet.com
Maybe millennials did the sums and realised their hourly pay was somewhat closer to burger-flippers after finishing their 100 hour weeks!
Horsehit? That they exist? Or that they have no value?
I shall assume that you mean that they have no value. (I did not say home ownership, I meant the homes themselves. Millenials have to stay somewhere, and ADA compliance, mandatory solar panels and high-efficiency refrigerators do not come for free)
Anyway, if the things I listed (and many I did not) are so worthless, why do we have them? Would you rather have airbags in your car, or take the cash, like a Baby Boomer?
Prove anything by multiplying Huge Number times Tiny Number
Are you USA-ian?
A common trope is that Millenials are poorer that previous generations. However, they have many things that earlier generations did not:
High-efficiency homes and appliances
Cars with many safety enhancements, lower pollution and better mileage
Better insulated, less polluting, better constructed and safer homes
"Green" energy supplies of fuel and electricity
Much more recycling
New drugs and healthcare technology
Higher spending on schools
Higher safety from crime and terrorism
New government departments and agencies to look out for the public's interests.
It should be pointed out that these benefits don't come for free, which may explain why millenials are poorer in cash terms, but richer overall. This is the choice made by society.
None of those are explicitly for millienials. I'm far away from millienial yet I drive a fairly recent car, partake in recycling, live in a safe area, have access to the new drugs and medical techniques. Plenty of new housing around here, only I chose my 1973 home carefully, in a quieter-than-usual corner of my neighborhood.
New government agencies? What.. Space Command or whatever Trump's Space Force is called? What new waste of money has the Feds come up with that you're speaking of?
Higher spending in schools? Now I know you're not USA-ian. In the US schools get the short shrift and have to make do with a miserly budget.
The "Civilized World" jumped the shark ca. 1973.
Personally, I suspect age is a factor. The last decade or two has seen a lot of expansion of investment into younger entrepreneurs.. And there's been a lot of getting burned by investment into that sector.
I'll definitely agree that a lot of young people have the discipline to keep the books, but they're very unlikely to know the finer points of how this is really going to affect them outside what textbooks say. And have far less experience in planning for the tougher times, as they've not had to account for a whole load of continuity factors (which come with experience, and seeing other people's screwups as well as your own, on someone else's dime).
And for every person that brings along a personality trait that offsets experience, you have the younger person with the same traits without the experience, which makes a rough situation untenable.
Back when I was setting up my first company in the '90s, I brought in a PR company to get the word around, and the quote I had then was that it was a shame I didn't have more grey in my hair, as it was a trait that was reassuring to investors, as it brought the impression of experience to the table.
Then it became cool to have young CEOs and entrepreneurs, so the money went with the cool, and the ROI didn't quite pan out as hoped. Yes, there are young people with all the right traits for success, but experience AND traits beats traits. And given that the old cycle of 'older people getting the investment, doing a few decades and retiring' is now broken, you have the young successful people that were invested in originally starting newer ventures and being successful in the 4th, 5th, 6th try by now, and they know how to get the funding. And the ones that were successful in the first place now have the track record, and they're starting new things too, competing with the slightly younger and completely inexperienced people. From an investment point of view, you get two people asking for cash, one with a good track record for return, one completely without record, and unless there's a sure fire win in the untried, by and large, it's returning to the older behaviour of the most probable best return.
You are correct that Millenials are not the only ones to "benefit". However, I believe they bear the brunt of the cost consequences and corresponding drag on growth.
New government agencies? Take a look here https://en.wikipedia.org/wiki/... . If you start in 1973, the same age as your house, you will note the massive success called the Drug Enforcement Administration. There are many others, and we all look forward to Millenials funding the Space Force.
Higher spending in schools? A contentious subject, but the best info I have found is here: https://www.politifact.com/vir... . As of 2015, adjusted for inflation, a 117 percent increase in federal spending per student over 30 years ago. Average NAEP scores for 17-year-olds have barely budged during the last 30 years of testing. So, more than double and you call it miserly?
My point is that people want these things, but they have to understand that there are unintended consequences, like poor Millenials.
Prove anything by multiplying Huge Number times Tiny Number
Exactly. The democratic system has made this choice, for better of worse.
Prove anything by multiplying Huge Number times Tiny Number
Until it was way too late. Allen got his diagnosis in 1982 and made it until 2018. He didn't die from the cancer per se, it was septic shock. Better treatments will fix that.
Zuckerberg is young, rich, and got rich when he was young. He's going to have the advantage of several decades more advancement.
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> I personally could make an E-Bay competitor in a month, it would cost a lot, but I also doubt I would steal many of eBay's current customers. 20 years ago, I could get VC money if I showed I could set up infrastructure to do so
Creating similar functionality is easy. I did that 20 years ago.
No VC would be interested in my dinky little eBay clone. Infrastructure isn't special either. You can very easily find people who know how to set up servers and such. You just have to ask a few load balancing questions in the interview to sort out the ones who know how to scale.
What eBay has that is valuable is customers. If you have a million customers and that number is increasing every month, that's what gets investors interested.
The article left out an obvious likely difference between this generation and people 20 years older. It actually sounds like the author may not see it because they themselves are affected. That's the entrepreneural spirit. The article basically listed excuses for why millennials can't start businesses. (Basically because they don't have much money). News flash - a large percentage of immigrants start businesses, and they don't show up with an $200,000 in their pocket. Immigrants very often come to America with nothing but a dream, a hope for the future and a burning desire for a better life. It's that dream coupled with drive to do something to achieve your dreams that characterizes and entrepreneur.
In fact, having money, having cushy job, will *discourage* people from striking out on their own. If you're well-paid by employer and have great benefits, why leave that? It's most often when people are laid off or unable to get a job that they start their own thing.
tech's doing just fine. The way venture capital works is you throw money at 100 businesses, 98 of them fail and you make a killing on the 2 that survive and thrive.
.com boom because it was a whole new technology. That's a once in half a century event. Millennials, like everybody else, would much rather have money in hand, a steady paycheck and several weeks of vacation than some charismatic CEO type giving them free beer in exchange for half the pay and 80 hour work weeks.
The article is saying that Millennials don't want to work for start ups anymore. I don't think they ever did, it's just that the economy's finally recovered enough they've got options. Most start ups pay like crap, give you stock options to make up the difference and then either collapse leaving you with worthless options or do like that "OnLive" company did an fold the company on paper forming a new LLC and invalidating all the existing options.
It's very, very rare that working for a start up pays off. There was a lot of that during the
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usually have rich parents to fall back on so they can go back and finish their real degree when the start up fails.
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If you start in 1973, the same age as your house, you will note the massive success called the Drug Enforcement Administration.
And now we now for sure you're a full of shit boomer. The DEA is overall a massive failure. The war on drugs is a massive failure.
From the Wikipedia I linked:
"In 2014, the DEA spent $73,000 to eradicate marijuana plants in Utah, though they did not find a single marijuana plant. Federal documents obtained by journalist Drew Atkins detail the DEA's continuing efforts to spend upwards of $14 million per year to completely eradicate marijuana within the United States despite the government funding allocation reports showing that the Marijuana Eradication Program often leads to the discovery of no marijuana plants."
Remember that when you call for government intervention.
Prove anything by multiplying Huge Number times Tiny Number
1. Study hard so you understand all the needed topics. Go full Renaissance man on all the topics needed.
2. Read up on emerging science.
3. Have the academic ability, time and wealth to study more.
4. Have the skill to talk about what is emerging. Learn to talk to people and to talk to large numbers of people.
5. The money and location to build on ideas. To buy new equipment needed.
6. To know your own limits and know when to bing in an outside expert to clear a problem.
7. How to create something new.
8. To protect that creativity. Sell the brand to the world.
8.5 Learn how to do a great interview. Have a great translator to help with international languages. Do an interview at 3 am when needed. Be nice to the person doing the interview. Know your topics and be ready for many varied questions about your past, skills, interests and product/service/brand.
9. How to grow with your brand and when to start a new brand.
9.5 When people report problem thank them for the report and tell them how the problem is getting fixed. Fix the problem and thank the person again telling them what was fixed and when.
10. Teach other people how you did something really new and great.
People don't do great:
They are not that smart.
That are not able to talk about their product to random people.
Their nation has strange tax and funding laws. Starting a new business is really difficult in their nation. Laws stop people. They have no money.
They don't protect their product.
They don't seek the best help to get their product ready in time. Average engineers and artists working for big brands are working on the same problems too.
Don't go to failed nations that allow all your great work to be copied by a local brand.
Look into your workers pasts. Are they criminals? Do they have political activist friends, a political past?
Domestic spying is now "Benign Information Gathering"
As a professor, it was painfully obvious the year that "millennials" started hitting. In order to create fair exams, certain content is repeated for comparison. These provide measures to see if variation in class performance is due to baseline ability, or mistakes in test writing. At the time, we were not sure what was going on, since the millennial phenomena hadn't been described yet. All we did know is that these students were profoundly worse than the years before. They struggled with concepts, gave up when faced with difficult problems, and became irate when you did not drop everything to cater to them, on their schedule. This trend continued for several years.
Worse, there was a growing trend of arrogance that went with this relative lack of ability. Increasingly, students began to confuse the ability to look up something on wikipedia, with actual knowledge and problem solving skill. They were also very dogmatic and intellectually uncurious. If presented with a fact that challenged their preconceptions, they would simply shut down and ignore it. I never thought that exchanging ideas at a university would no longer be in vogue.
So, when stories of this generation began to circulate about this generation being lazy in the workplace with a sense of entitlement, I was in no way shocked. This is what I had seen in my engineering classes. To be clear, I am not saying that I had zero, bright and hardworking students. Some of the best that I had taught were in this era. What I am saying is that the proportion of academic gems to soot was very low.
I would also be remiss not to comment about "being saddled with 1 trillion in college debt." That is classic millennial thought. I.E. a complete and total lack of personal responsibility. No one forced that generation to go to a high priced schools. Every state in the U.S. has a very good public university, which is not all that expensive. This was an option. In fact, it is one that I personally chose, so that I would not have huge, crippling debt. As a generation, millennials were remarkably short sighted and un-analytical about college. It does not take a genius to understand that spending $240,000 at an elite school to earn a degree that leads to jobs that make 30K is simply idiotic. Yet, many of millennials did just that.
No one forced that generation to rack up this debt in trivial non-ecconomcailly viable majors. In fact, because of the internet, millennials had access to far more information about salaries and outcomes than any other generation before it. As a group, millennials simply CHOSE to ignore advice, evidence, and basic math. It is not anyone's fault but their own. Now, they need to live with the consequences of bad judgement.
So, yes, every generation has its triumphs and flaws. Some win major world wars, some travel to the moon, and some even invent the internet. Others, well, I guess their crowning achievement is finding a way to count the number of superficial friends that they have... and wonder why they are considered lesser by those before and after them.
"Liberalism is a very noble idea, currently controlled by some very bad people. Be sure you do not get the two confused.
staring a business might be negative pay, but so is sitting around while no company will employ you. Or worse yet, you could get a job and take it only to lose money because cost of living is more than what the job pays.
There are no angles in investing - there is only a pure business where you work your ass off for pie in the sky that may never realize. The only one who benefits is owner - which is not you but your Angle Investor!
Boomers have had more economic opportunities than any other generation of Americans before or after them.
Remember when Peter Thiel started paying people not to go to college and start their own leading edge tech enterprise fresh out of high school? So how well did that turn out? Then there is Theranos, another company funded by someone who never bothered to get their bachelor degree. Now Google, under its new management, wants to contract people without degrees as long as they pass a paper or whatever test. But with their shrinking main business why do they even need that many people to begin with? Burnout? Not interesting anymore?
"No one forced that generation to rack up this debt in trivial non-ecconomcailly viable majors."
Hmm... I wonder why your generation didn't rack up so much debt? *cough* public support for higher education *cough* Hmmmmmmmmm...
Hahahahahahahahahahahaha! He he he whoa-ho haha whee-he hahahahahaha!
"democratic system" !!!
Good one, broham, good one!
"USA-ian"
Is that similar to a Euroturd?
"We fought for freedom, and all we got was democracy." -- Pieter-Dirk Uys
Prove anything by multiplying Huge Number times Tiny Number
[...] lead to depression and burn-outs because they drink less, smoke less, work harder, take better care of their health and is in many ways much less rebellious than in the past.
fixed that for you.
Todays Millennial lifestyle would have made dystopian sci-fi material not too long ago.
I don't see this as an age issue. But an issue with education and perception of education.
Back in the olden days most middle class jobs didn't need any education. Drop out of school in the 8th grade and get a full time job and you are good for life. High School degree was good enough to often get you a cozy white collar job. an Associates degree Low level management, Bachelors degree mid management, Masters top level management, PHD mean you were some specialist or a professor.
What happened? Well 2 World Wars, a bunch of wars against the spread of communism. So this added the GI bill which help pay for college making it affordable for the average citizen to get a degree, and also to help avoid being drafted as students will be less likely to be drafted.
So by the late 20th century nearly everyone had a High School degree, and many have some college. This just raised the bar, on the minimum requirements.
Now the problem is there is a lot of talent who just isn't good for school. And we should find a way to help find such talent and bring them in. But also there is just a lot of lazy kids without the talent, and doesn't want to do do more school.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
If you start in 1973, the same age as your house, you will note the massive success called the Drug Enforcement Administration.
Oh wow, DEA 1973. Hardly a "new" agency. It's almost as old as I am. The others I can think of are nothing to be proud of. DHS? TSA? Please, fetch me my sick sack, I'm about to return my breakfast.
The DEA and the whole war on drugs is a fail.
And where's all this spending for schools? I certainly don't see it. Teachers are paid a pittance, schools are in disrepair.
The "Civilized World" jumped the shark ca. 1973.
There are a lot of professions which do not require such a high level of education. Sure. It does not mean those occupations are not important. We still need carpenters, plumbers, electricians, etc. Those people still need a high level of education to perform well, but they can learn on the job.
It's when you claim to design a leading edge chip design with people fresh out of high school, like Peter Thiel claimed, that I start to scratch my head and consider that he's bonkers.
Recent trend?
https://www.youtube.com/watch?...
Hint, check the aspect ratio of the above clip (4:3, not 16:9).
Your third paragraph is confusing businesses and startups. Immigrants start businesses, but usually something safe that doesn't scale. And many of them fail.
Your fourth paragraph is contradicted by reality, most successful startup founders are from rich backgrounds. Their wealth and connections allows them to gamble on speculative startups.
> Your third paragraph is confusing businesses and startups. Immigrants start businesses, but usually something safe
So if I'm understanding you correctly, you're doing three things here to completely change the question, then asserting an answer that's still false, even after you changes the question. First, you change my words from "start a business" to "launch a start-up". Okay, I'm fine with that. Oxford Dictionary defines start-up as:
--
Start-up
1.1count noun
A newly established business.
âproblems facing start-ups and small firms in rural areasâ(TM)
--
Okay, that's fine. They mean the same thing.
Then in step 2 you redefine English to say that any fairly safe business, any wise business, isn't a newly established business - only wild gambles are start-ups. Sorry, English disagrees with you.
> most successful startup founders are from rich backgrounds
If you had claimed "the top three crazy start-ups that get then most press in Silicon Valley were started by rich people", you might be right. 99.999% of start-ups are not in fact Tesla. As it is, your claim isn't just wrong, it's wildly, ridiculously wrong. Hilariously wrong. For example, the *average* investment by an angel investor is $32,000. Meaning of course the founders needed to find an angel in order to get $30K, because they don't have $30K. SBIC figures show total investment by all investors of less than a million for most start-ups.