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This American Life is a radio program in the United States. Well-written, it is regularly the country’s most popular podcast. The show typically includes three or four stories revolving around a quirky theme. They often explore little-known corners of the national experience, with wry anecdotes that might include childhood reminiscences of an older citizen, the recitation of one person’s dreams or another’s confession, perhaps a memoir from an otherwise anonymous individual. In a TAL segment a couple of years ago, the host interviewed an executive at the world's largest manufacturer of mousetraps. He said that he is regularly contacted by people who think they have invented a better mousetrap, which, thanks to Ralph Waldo Emerson, is the time-honored metaphor for an entrepreneur (“build a better mousetrap, and the world will beat a path to your door”).
We learned from that show that the world doesn’t really need a better mousetrap, since the conventional solution costs less than a dollar and is effective 88% of the time. But luckily for entrepreneurs, the world still needs metaphorical mousetraps, at least according to a Kauffman Foundation study released on May 20. It concluded that entrepreneurial activity in the U.S. increased last year to its highest rate since 1995, representing an increase of 4% over 2008 and 10% over 2007. The report also included some interesting details that suggest that the United States may be on the verge of a boom in entrepreneurship. For one thing, it disclosed that about half of the new entrepreneurs are “baby boomers,” born between 1946 and 1964. Comprising more than 25% of the U.S. population and a third of its work force, boomers are the single largest population cohort, have already produced a stellar group of entrepreneurs (including such luminaries as Bill Gates and Steve Jobs, both of whom were born in 1955), and are now arguably moving through the prime years of entrepreneurial activity.
Assuming the rate of business formation stays the same, the size of the baby boomer cohort indicates that the number of start-ups will grow over the next decade. In every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34, an average roughly one-third higher than that of their younger counterparts. After all, that age group has more expertise and work experience, a larger network of business contacts, and better access to capital than younger workers, and they now look forward to a longer and more productive career and lifespan than prior generations. Moreover, as a result of the financial crisis, many boomers have been pushed out of corporate jobs prematurely and have had their retirement savings decimated by the market turmoil; many of them will choose to start a business simply because their other employment options are limited.
But enough about me . . . or at least my generation. The Kauffman study also bears evidence to the fact that a new batch of entrepreneurs is coming from the ranks of Generation X (those born between 1965 and 1979) – in fact, entrepreneurship growth last year was highest among 35- to 44-year-olds. Gen-Xers have been called slackers (“seriously, dude”) and are seen as cynics, derisive of the future. Many are thought to be bitter toward us baby boomers for dictating cultural and entertainment options for the last 40 years, while clogging organizational charts and blocking their advancement in the job market. Some Gen-Xers undoubtedly fit the stereotype, but many of them work hard, are making significant economic and societal contributions and have already proved themselves to be successful entrepreneurs. Google’s founders, Larry Page and Sergey Brin, are the two most famous Gen-X entrepreneurs, but their ranks are likely to swell in the years to come.
If baby boomers are congenital entrepreneurs entering their prime business-creating years and Gen-Xers are starting to come into their own on the entrepreneurial front, what about the under-30-somethings, the so-called Millennials, a/k/a Generation Y? Here again, there is reason to expect great things. Though their age bracket had the lowest rate of entrepreneurial activity in the Kauffman study, as they mature, they might become, as a report from the Institute for the Future predicts, “the most entrepreneurial generation ever.” They are digital natives – the first generation to grow up with digital technologies rather than having to adjust their lives to accommodate them – and are not the least bit uncomfortable with the very technologies that are driving fundamental structural change and creating entrepreneurial opportunities in so many industries.
In addition, as the children and grandchildren of baby boomers, they have grown up with successful role models in a culture that respects and rewards entrepreneurial activity. It is estimated that more than 2,000 colleges and universities currently offer courses in entrepreneurship (up from 16 in 1970). My daughter graduated from one of them on Monday, earning her MBA from the Yale School of Management. She estimates that about 10% of her class will take their new degrees directly into an entrepreneurial environment, and the expectation is that many others will eventually do so – especially if the job market continues to be depressed, since that will, as my daughter put it, reduce the opportunity costs of an alternative career path. And as if to illustrate the respect for entrepreneurial activity in academia, Yale awarded honorary doctorates to Michael Feinberg and David Levin – the founders of KIPP, a charter school management organization . . . and Gen-Xers to boot.
Perhaps I should scribble off a note to the producers of This American Life. It’s time for a spinoff, This Entrepreneurial Life. There will be plenty of stories to mine down that road.
Mr. Connelly is the Chief Executive Officer of Mosaica Education, Inc., which manages K-12 schools in the United States and also provides educational services in the MENA region. Mosaica is a four-time Inc. Inner City 100 honoree and the only company to rank in the top 5 three times; it was No. 1 on the list in 2005. His email address is firstname.lastname@example.org.
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