Millennial Entrepreneurs: The Easy Way to Millions?
Although the technology sector has been following a boom and bust trajectory over the past twenty five years or so, it’s really within the last decade that social media and e-commerce have reached a level near-universal acceptance where becoming an online millionaire (or billionaire) is no longer only left to the select few like Bill Gates, Steve Jobs, Steve Wozniak, and Michael Dell.
Start-ups, many conceptualized and run by Millennials, have been rising up, sometimes seemingly out of nowhere, with such household names as Facebook, Scribd, Shopify, and even Google. The apparent influx of tech start-ups and the cash they attract and generate has, in part, led many to see Millennials an entrepreneurial generation. But are we really? Is entrepreneurship really something to be studied and planned for?
A recent article in the Financial Post, “How tech’s young millionaires spend their money” discusses some of the rosiest success stories of Millennial technology entrepreneurs. It insinuates that all one must do to strike it rich online is live on a frugal budget and maybe find some seed capital.
In many ways, entrepreneurs can be compared to Olympic athletes. Like elite athletes, successful entrepreneurs have just a little something extra; whether that’s drive, dedication, creativity, intelligence or something else. There may be many very strong skiers across Canada, but only a select few make the cut to compete on the World Cup circuit, and even fewer get to fly to the Olympics. Regardless of their aspirations, those who don’t make the cut were just missing that ethereal ‘something extra’.
Entrepreneurship is risky (that’s the point), so be aware and informed
Entrepreneurs who build successful companies are the athletes who make it to the Olympics, but the failure rate is daunting. How many children who buckle up a pair of ski boots ever get to walk in the athletes’ parade at the opening ceremonies? It’s frankly quite shocking that, in an area so filled with failure, the subject is almost never discussed head on.
We Millennials are often referred to as a generation who has been coddled: told by our parents that we can do whatever we want and that nothing can hold us down. This (perhaps overly) positive attitude has been reinforced in school systems that can often no longer fail students through high school.
Urging a generation with little taste of real failure down an extremely risky and often misunderstood path is dangerous. Yes, as Brock Blake indicates in his recent Forbes article “Why 20-Somethings are the Most Successful Entrepreneurs”, Millennials often have little to lose – but this can also be a bit misleading.
Many Millennials aren’t debt free, and debt levels are higher than ever. A small increase in interest rates could be disastrous for a generation of over leveraged, over educated and under employed Canadians (it’s important to remember that student loans are not covered by bankruptcy protection in Canada). Millennials also tend to have little equity in the homes they own and relatively little savings; meaning start-up capital often comes from family or angel investors. So, while it’s true that the Millennial entrepreneur may have little to lose individually, they may be playing a risky game with others’ money backed by little real concept of risk management.
I recently wrote another article looking at some of the other risks associated with so-called ‘lean start-ups’, which are more and more common today, especially in the technology sector. The central message in that article was the importance of planning to the success of an entrepreneur – this is doubly important for Millennials, who may have little to lose, but also have little in the way of experience with failure. Planning and risk management are the un-sexy parts of a start-up, but they can save your business.
There’s nothing easy about becoming an entrepreneur, and for the vast majority of those who try, it’s not a quick way to millions. But it can be a rewarding and challenging experience.
What’s the Path to Entrepreneurship?
In his Forbes article, Blake cites a list of five uber-successful entrepreneurs and the companies they started:
- Google: Sergey Brin (25) and Larry Page (25)
- Apple: Steve Jobs (21) and Steve Wozniak (26)
- Microsoft: Bill Gates (20) and Paul Allen (22)
- Facebook: Mark Zuckerberg (20)
- Wal-Mart: Sam Walton (26)
He then guides readers to the easy pattern: all the individuals on his list were between 20 and 26 years old when they founded companies which would go on to become some of the most successful of our time. However, there are two other, perhaps more important patterns that potential entrepreneurs could glean from this list. First, none of these founders studied entrepreneurship in school; and second, each of these companies capitalized on observed gaps in the marketplace.
Most successful inventors didn’t study inventing in school, and I would argue that most successful entrepreneurs didn’t study entrepreneurship. Smart, creative people identifying and capitalizing on gaps in a given market are a more common success path for entrepreneurs than those who decide they want to start their own business and go looking for a way to do so.
Perhaps a reason for entrepreneurial success in the high tech sector is Millennials’ status as digital natives – we tend to be more comfortable with technology than other generations, and tend to use that technology in different, more integrated ways.
Identifying or observing these untapped market gaps can be a critical skill for a budding entrepreneur. In their book “Blue Ocean Strategy”, Kim and Mauborgne do an excellent job of providing a historical track of many market gaps companies took advantage of in order to outmaneuver their competition. Although not free from criticism, the book is a solid starting point for an entrepreneur with an idea.
Entrepreneurship can be rewarding, but it’s not for everyone. Just because you’re a Millennial doesn’t mean you have to be an entrepreneur – and just because you’re not a Millennial shouldn’t stop you from trying. There are more important factors than age and expectations.