Where did all the entrepreneurs go?

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Date: 4 August 2022

A woman is on the lookout for start ups

We live in an advanced economy, driven by dynamic, ambitious young talent looking to make their mark on the world. Or so the story goes. But careful evaluation of the data reveals something quite different. Far from being at "peak entrepreneur," we're actually in the midst of a start up winter .

Think about the start ups that came out of the 1980s. We had Amgen, Biogen, Compaq, Lotus Development, Paychex, and a host of others. Then in the 1990s, we got Google, Netscape, and Napster. But what big start ups can we really point to today that are changing the world?

Think about it. Even the likes of Airbnb and Uber are well over a decade old now. Who is innovating and disrupting today ? If they're there, they're not particularly high-profile.

The problem is so entrenched that the World Economic Forum has picked up on it. Klaus Schwab, Bill Gates, and others are all asking one question: where did all the entrepreneurs go?

The answer is that nobody really knows. However, global elites have various theories. And they aren't always what you might think.

Society puts entrepreneurship on a pedestal

One theory is that entrepreneurship has now become something of a glamorous celebrity pursuit. The likes of Elon Musk and Jeff Bezos appear to do things that are so magical that the average person feels unable to compete. Billionaires seem to have access to spiritual powers that are permanently out of reach of the rest of the population.

Of course, none of this is true. The glamour of entrepreneurship masks the reality on the ground. But that doesn't stop media images from firing the public imagination. Working 120 hours per week doing repetitive, tedious tasks, was never so sexy, or unattainable.

Lack of experience opportunities

There's also another problem according to The World Economic Forum: a lack of serious opportunities for people to hone their entrepreneurial skills. While there are surely entrepreneurs out there, the college system and job market railroad people into tightly-defined careers. And that's bad for innovation.

The problem is also self-fulfilling. The fewer start ups there are the fewer opportunities to gain experience. And the fewer people with start up experience, the fewer opportunities there will be.

It has nothing to do with education, either. You can learn all you like about organisational structure and company formation, but firms are essentially groups of people working together to provide a service. That's it. There's nothing more complicated or abstract about it than that.

When workers experience this type of start up culture, reality quickly hits them in the face. Everyone is doing everything they can to make the company a success, and pretences fall away. It's a very human experience.

The same is not true in the bureaucratic corporate world. While big companies might celebrate academic achievements, they don't embrace those with street smarts.

Parents don't allow failure

There are also deeper cultural shifts at play, according to the World Economic Forum. One issue, particularly in the West, is that parents don't allow failure. Children must succeed in every stage of their development or risk becoming pariahs.

This insistence on success, though, is unrealistic. What's more, it makes children fear failure, preventing them from stepping out and doing high-risk things in the business world when they become adults.

Parents will often give their children beliefs that are not true. These might include things like:

  • all self-employed people are poor
  • you need at least ten years of experience in an industry to be successful
  • only people with a lot of capital can start companies

These misconceptions bury themselves in children's unconscious and change the way they behave as adults. Teenagers and people in their twenties and thirties want to expand their lives but are fearful of doing so, just in case they get it wrong.

The government isn't helping

When it comes to entrepreneurship, many governments around the world stand back and just watch what happens. However, there are some that make life difficult, particularly as firms expand beyond the home office.

There are two main problems right now:

1. failure of regulatory bodies to keep pace with innovative business models

2. lack of understanding of technology trends

Entrepreneurs would love to break new ground in multiple industries, but existing rules make it almost impossible to implement disruptive business models. Entire sectors continue doing things the old-fashioned way because entrepreneurs can't find a way to make their innovations work.

The solution to this, according to the World Economic Forum, is to design policies that promote innovation. However, that's challenging to do. Innovative roadblocks can show up all over the place, often in places you would never expect, such as tax laws or GDPR.

To solve this problem, governments need to have careful conversations with entrepreneurs about the consequences of their regulations. Only people on the ground can show regulators where the bottlenecks are and why they should remove them.

Increasing pessimism

Moreover, businesses tend to boom when people are optimistic. When the future looks bright, planning horizons extend and entrepreneurs commit themselves to decades-long projects. There's so much to look forward to, and everyone is racing towards it.

However, when pessimism rises, the opposite is true. Planning horizons get shorter, and many people give up on the idea of founding a business at all.

We're currently in one of those times. Young people are more pessimistic than ever before, thanks to a steady stream of negative news. They worry about climate change, pollution, environmental degradation, war, and economic collapse. It all looks like bad news. All these factors deprive them of the necessary energy they need to start and run a firm.

There are also more personal reasons for increased pessimism: the lack of personal inspiration. To start a great business, entrepreneurs should want to change the world for the better. However, many don't.

Conclusion

Entrepreneurship is currently going through a winter, but that means bigger opportunities for those who do get into the arena. Profits haven't disappeared, so leaders who take the leap stand to benefit considerably.

Copyright 2022. Article was made possible by site supporter Jeremy Bowler.

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