There has been quite a bit of discussion lately about the role the Entre-Boomers (those of us from the Baby Boomer generation who are pursuing entrepreneurship) in the economy. Now that we are in what looks to be a prolonged economic lull, the role of Entre-Boomers may become more important than ever.
My colleague John Wark sent along a discussion about this that was published this week at The American:
Contrary to popularly held assumptions, it turns out that over the past decade or so, the highest rate of entrepreneurial activity (a measurement of new business creation) belongs to the 55-64 age group. The 20-34 age bracket meanwhile–which we usually identify with swashbuckling and risk-taking youth (think Facebook and Google)–has the lowest. Perhaps most surprising, this disparity occurred even during the decade surrounding the dot-com boom–when the young entrepreneurial upstart became a cultural icon.
- 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.
- For the entire period, the 55-64 group averaged a rate of entrepreneurial activity roughly one-third larger than their youngest counterparts.
- These trends seem likely to persist: in the Kauffman Firm Survey, a longitudinal survey of nearly 5,000 companies that began in 2004, slightly less than two-thirds of firm founders are between the ages of 35 and 54.
- Additionally, Kauffman research has revealed that the average age of the founders of technology companies in the United States is a surprisingly high 39–with twice as many over age 50 as under age 25.
So what are the implications of these trends?
First and foremost, we better get our small business policy right to make sure these Entre-Boomers and their children in the Entrepreneurial Generation (the second most entrepreneurial age group) can be successful.
Entrepreneur magazine has a revealing debate that gets to the heart of what needs to happen policy-wise to ignite entrepreneurial activity in our economy. It has a debate about the so-called stimulus package between two prominent economists. I agree with position taken by Raymond Keating, chief economist of the Small Business and Entrepreneurship Council in this article:
I’m against it because if you
really want to get entrepreneurship and investment moving again, you
need tax relief that’s not targeted and temporary. Investors and
entrepreneurs need [permanent] changes that will really improve the
profitability of taking risks in the expansion or startup of businesses.
On the spending side, I think most entrepreneurs understand that these
resources the government is tossing around…don’t materialize from
nothing. The economy would benefit from leaving those resources in the
private sector rather than putting dollars in the hands of politicians
and their appointees to decide where they are going to be spent.
Even economists who think this is a good idea will acknowledge that
it’s just an effort to throw as much money as you possibly can at the
problem and hope that something good comes out of it. Is it better than
nothing? Yes. Is it enough to really get our economy moving? I would
say no. It falls way short.
We also need to understand that most of the ventures that Entre-Boomers are creating will be small and organic. They will be bootstrapped by both choice and necessity. All of this talk about the need to focus on high growth, venture-backed firms is misguided. I hope Scott Shane and others like him will look at the entire set of data out there. But, given his latest comments at the New York Times small business blog, I am not sure if this will ever happen, as seen by these comments:
I am supportive of the argument that government policy should encourage
the formation and development of venture-capital-backed start-ups. In
various books, articles and blog posts, I have said that the federal
government should focus more resources and attention on high-potential
start-ups and less on the typical new business. Such an approach would,
as the venture capital association argues, provide a greater return in
terms of job and wealth creation to government investment in the
creation of more typical new companies.
His myopic brand of socialized entrepreneurship is not enough to get things going. These folks need to stop the false debate of small business versus venture-backed firms. We need both right now! The data shows that we need the high growth firms for their breakthroughs and we need small businesses for their job creation power. And neither type of business gets any long-term benefit from government meddling.
Finally, we need to find a way to socially and culturally harness the entrepreneurial energy of the Entre-Boomers. The economy does not operate in some sort of vaccum where only the exchange of goods and services takes place. The economy is shaped by culture, and culture shapes the economy. The current dramatic rush toward socialism is reinforcing a passive, dependent society. My students and I saw first hand during our trip to Eastern Europe where this will take us.
The sheer numbers and assertive nature of the Boomers shaped our culture in the 1960s and 1970s. It is now time for them to help lead us again. Their growing emphasis on economic self-reliance can translate into a renewed celebration of the power of free enterprise in our society and culture. At least I hope it can — as that may be our only chance to turn this mess around.
Great post Jeff – maybe you should look into guest blogging for the NY Times small business blog. My guess is the four bloggers they have so far don’t offer a wide variety of opinions.
I like the term Entre-Boomers!
Now that you mentioned it, I too had the “popularly held assumption” that younger people started more businesses over the past decade.
But I think there is a good reason for that: If a 25-year-old and a 55-year-old achieved similar success with their start-ups, guess which one gets the media’s attention? Also a couple big ones, like facebook and G, are more than enough to change people’s perception.
Another possible reason, as I thought when I was reading it, is that many “entre-boomers” may be starting businesses in the same field to which they’ve dedicated their entire career. It is harder to achieve an “awe” effect in a relatively mature market, and even if they do, the “startup” side of the story may be under emphasized.
It is good to see some survey data, and it is indeed refreshing.
Being 56 and an entrepreneur, I am well aware of the number of my peers that are turning from the corporate life to entrepreneurial ventures, but it’s not always out of a driving desire to be self-employed. Unfortunately, it’s just as often out of a need to survive as anything else.
Many Baby Boomer Entrepreneurs have lost their jobs and even their entire careers in the last decade, and once you are past the age of 50, it seems that most people in the hiring seat consider you one step short of the graveyard. We’ve lost homes, savings and retirement funds at a time when we were putting kids through college, and starting to take on the care of our parents as well.
The web has proven to be the perfect place for many of us to turn to for our start-ups: for a fraction of the cost of a brick and mortar “traditional”, you can start an internet based venture, and have a business that not only will provide you with an income, but a flexible schedule you could never have in the corporate world.
Having spent the last 3 years commuting between my home in Cincinnati, and my parents home in Reno, sometimes spending two to three weeks and doing so several times a year – I can personally attest to the fact that web based businesses really can often be a ‘set it and forget it’ stream of income.
The bottom line is this: just because we are Over 50 – it doesn’t mean that we are old, in body, thought or drive. The Over 50 Entrepreneur is a force to be recognized – online as well as offline.
Melody
SecondWindEntrepreneurs.org