Generations - Which One Was the Best Environment for Entrepreneurs?
What is a Generation?
A generation is a group of people born around the same time and raised around the same place.
They have similar values and characteristics.
These characteristics, including communication, buying patterns, and motivations stand apart because of experiences during the group's ‘coming of age’ moment.
Of course, on individual level, everyone is different and some (ahem Millennials) are pushing these differences to their extremes. But, for the purposes of this article, it is helpful to look at which of these experiences shape the best American entrepreneurs.
Entrepreneurs can come from any generation and any age, but how does the environment affect the mission and success of entrepreneurs?
Overview of Generations
Generation Z: Born 1996 and later
(iGen, Centennials)
Generation Z is slated to be a much larger and more diverse generation than those before. In 2006, there were a record number of births in the US and 49% of those born were Hispanic.
They are buyers. They have been saturated with smarter and smarter ads since the day they were born. With over $170 billion spent by parents of 8-12 year olds, raising a child has never been more expensive.
The cost of school, insurance, food, programs, etc. has continued to rise and expectations have risen along with them. People are having less children, but spending more per child.
It is still early for predictions, as most of the generation has yet to go through those formative years. But time will tell as Generation Z’s buying habits mature if they are afflicted with the entitlement tag that has plagued Millennials. There are also signs of eco-fatigue, meaning they’re tired of hearing about the environment and how they are going to save it.
As for how they will compete in the entrepreneurial landscape, they will be far and away the most technologically advanced generation. Generation Z has never known a world without the internet, cellphones, or computers.
They’re ditching toys in favor of the ever-present screen. Instead of TV raising children, many Centennials will grow up raised on their favorite apps. Mattel, the maker of Barbie dolls used to have a decent share of children’s attention. In the 1990’s the average user of their product was 10 years old. A decade later it dropped to 3 years old. This group will be much less interested in toys and likely the most (phone) addicted generation yet. But it takes more than technological sophistication to be the best entrepreneur.
Millennials: Born 1977 to 1995
(Gen Y)
9/11 was the generation-defining moment for Millennials. Making the shift from Millennials to Generation Z. Members of Gen Z cannot process the significance of 9/11. It has always been a part of history for them.
Millennials are the largest generation in the U.S. workforce, and as customers, they bring the greatest lifetime value. In addition, Millennials exhibit different attitudes toward employment, sales, and marketing, which are challenging the status quo.
Again, it should be pointed out that this is a vast overview of a generation, and the following traits will not be applied to everyone. Generally speaking, Millennials prefer digital literacy and internet socialization. The first group with unlimited access to information, they have strong views. This is especially apparent as social activism has taken and will continue to take the forefront in terms of buying decisions. Millennials love instant gratification and expect the world to move at a 24/7 pace with immediate processing.
But are they the best entrepreneurs?
According to John Lettieri, the co-founder of the Economic Innovation Group, "Millennials are on track to be the least entrepreneurial generation in recent history,”
In direct contradiction, American Express declared that "Millennials Could Be the Most Entrepreneurial Generation Ever."
Britt Hysen, the editor-in-chief of MiLLENNiAL magazine, claims that "60 percent of Millennials consider themselves entrepreneurs, and 90 percent recognize entrepreneurship as a mentality."
This is really the split.
The split is between actual entrepreneurs and and people thinking about becoming one. One big reason for the gap can be summed up in one word - Debt.
There are more borrowers (89 percent between 2004 and 2014) and more debt (up 77 percent).
This encourages less risk-taking even if you are entrepreneurial-minded, and with less risk, it lowers potential for failure.
Millennials have great expectations, and put enormous academic pressure on themselves (one reason for the loans) and face incredible pressure from parents. More than 40 percent of 25-to-34-year old Americans said a fear of failure kept them from starting a company in 2014.
These two factors hold Millennials back as a generation from being the best entrepreneurs. At least for now.
Generation X: Born 1965 to 1980
Potentially the savviest entrepreneurs, these kids grew up street-smart but often isolated as the children of divorced or career-driven parents. Therefore, this generation has been known to be very individualistic and entrepreneurial.
Many were late to marry and quick to divorce because they tend to commit to self first.
This self first mentality can be seen in business as well. They are cynical of many major institutions, which failed their parents during their formative years. It was not normal to work for a company for life, this generation averages 7 career changes in their lifetime.
This group saw a significant amount of change. Most remember being in school without computers because they raised in the transition phase of written based knowledge to digital knowledge archives.
As buyers, they know what they want, and they want it now. They like labels, and brand and credit card debt is seen as the normal.
Millennials may have the strongest entrepreneurial mentality. But when it comes to being scrappy and actually getting work done, as an entrepreneur, this group takes the cake.
The average age for a successful startup-founder is about 40 years old, according to the Kauffman Foundation. The only age group with rising entrepreneurial activity in the last two decades is people between 55 and 65.
Millennials might think that they are the entrepreneur’s generation, but it was the work ethic of their parents that are funding the new app or cookbook.
Baby Boomers: Born 1946 to 1964
(“Rock and Roll” Generation)
Baby boomers are the demographic of people who were born just after the Second World War when families settled down again.
Certainly a very lifestyle diverse generation. There were save-the-world revolutionaries of the ‘60s and ‘70s and the Yuppy career climbers of the ‘70s and ‘80s.
Arts and culture were pushed to the forefront.
It was the first generation of women working outside the home in record numbers. This changed the face of the U.S. as children were raised in a two-income household.
This generation saw its fair share of change as the first TV generation and first divorce generation. The lifestyle of baby boomers has and will change America almost incomprehensibly.
With buying habits, Baby Boomers and Generation X are similar in that they have a “buy now” mentality. They tend to be optimistic, driven, team-oriented.
They have a stick-with-a-company-for-life mentality. Among great numbers of Baby Boomers, huge risk and change were things to be avoided.
There were many successful small businesses that were started by this generation. There are excellent examples of leadership in great companies. The work ethic, grit, and determination necessary to be good entrepreneurs were all present. However, startup costs were incredibly high as was fear of failure, and societal aversion to change.
Silent Generation: Born 1927 to 1945
(Traditionalists)
This group went experienced a stifling amount of conformity, but grew up in postwar happiness. Women generally stayed home to raise children, and if they worked, it was only certain jobs like teacher, nurse, or secretary. Men were loyal to corporations and kept a job for life.
Scrupulous savers, the Silent Generation are the richest, most free-spending retirees in history, spending their retirement in peace. Some of the values that are important include discipline, self-sacrifice, and caution.
With some of the strongest work ethic and opportunity, this generation had many of the hallmarks of great entrepreneurs, but the caution and loyalty to corporations kept many from starting new businesses.
GI Generation: Born 1901-1926
(The Greatest Generation)
“Use it up, fix it up, make it do, or do without.”
They experienced a great amount of change during their formative years. Arguably more than Millennials and potentially Generation Z. They remember life without airplanes, radio, and TV. Most of them grew up without modern conveniences like refrigerators, electricity and air.
Their parents fought in WWI, and they were fighters in WWII. Their Depression was The Great One and their war was The Big One.
The legendary Happy Days of the post War created an environment ripe for change. They are the assertive and energetic do’ers. Excellent team players. They have near-absolute standards of right and wrong and a strong sense of community and civic duty.
For this group there was no “retirement.” You worked until your died or couldn’t work anymore. They avoided debt and bought with cash. With the GI Bill many got an education in order to start small businesses. There was a strong loyalty to jobs, groups, and schools. If there was a generation in recent history for small businesses and building something for yourself, this was it.
So Who’s Better?
In 2014, only 2% of millennials in the U.S. were self-employed, compared to 7.6% and 8.3% for Gen X and Boomers respectively. Millennials account for 23 percent of new entrepreneurs in 2013, down from 35 percent in 1996.
The winner as far as a mentality is certainly Millennials, but in terms of having the tools to put everything together - the generation for entrepreneurs is Generation X.
However, there are thousands of entrepreneurship classes on college campuses that Millennials and Generation Z are taking advantage of. It is possible that once Millennials find their way out of debt, they will cast off the shackles of employment to start their own companies. Or maybe it will be the generation immediately behind, Generation Z, that is smarter with their use of debt.
This article was written by Curtis Roberts, an attorney at The Founder's Attorney with a special thanks to Christian Odegard.
If you have any questions or suggestions please send them to curtis@foundersattorney.com.
This article would not have been possible without contributing writer Richard Chen.
You can see Richard's LinkedIn page here.
Resources
http://www.npr.org/2016/09/26/495487260/millennials-want-to-be-entrepreneurs-but-a-tough-economy-stands-in-their-way
http://genhq.com/faq-info-about-generations/
Generational Generalities. (2005). America’s generations. Retrieved November 6, 2007.
Marketing Vox. (2008). Generation Z. Retrieved on February 14, 2008.
Parents. (December 2007). Check out this news. Parents Magazine, p.166.
https://www.sba.gov/sites/default/files/advocacy/Millenial_IB.pdf
http://www.businessinsider.com/millennials-on-track-to-become-most-entrepreneurial-generation-ever-2016-9
https://www.entrepreneur.com/article/271972
https://www.theatlantic.com/business/archive/2016/07/the-myth-of-the-millennial-entrepreneur/490058/
http://www.npr.org/2016/01/11/460698077/goodbye-jobs-hello-gigs-nunbergs-word-of-the-year-sums-up-a-new-economic-reality
This article is for general information and entertainment purposes only. The views of the author are their own and do not represent the views of The Founder's Attorney. The information presented should not be construed to be formal legal or financial advice nor the formation of a lawyer/client relationship or any fiduciary duty.