It seems a long time ago that the term "small business" meant "Main Street" and "mom and pop." Not that dry cleaners or car mechanics or insurance agencies have vanished--far from it. But small-business owners wouldn't be serving as models in clothing ads or role models in business schools if something hadn't changed over the past decade; they'd be in the shadow of gray-suited corporate executives, as they used to be. So what's the new meaning of "small business"? In a word, entrepreneur. There's a world of difference. As the next century begins, the entrepreneur has captured--you might say cornered--the country's popular imagination. Entrepreneurs, in all their sloppy, T-shirted, spiky-haired glory, have been elevated to the status of cultural icon.
A cynical view might hold that it's all about money in a time of unprecedented prosperity. Certainly, the millionaires spawned by high-tech startups inspire awe and envy--and there are a lot of them. Among the markers and milestones assembled in our timeline of entrepreneurship ("How We Got Here," page 25) is the number of households headed by someone under 35 with assets of more than a $1 million. It has risen 250% since 1989. The number of initial public offerings through the decade rose from 154 in 1991 to a peak of 760 in 1996, creating thousands of instant millionaires. But is this the only reason for the decade's 38% jump in the percentage of college students who want to own a business? Hardly.
Listen to MIT's Sloan School of Management students who talked to us about their plans and ambitions ("A Conversation With Tomorrow," page 40), and you'll hear how the entrepreneurial boom of the '90s taps currents that run deep in American culture. One, for sure, is the desire to get rich. But there is also the rugged individualism of the cowboy, the determined climb of the self-made immigrant, the journey to the frontier, the Connecticut Yankee who tinkers away inventing the future.
At the millennium's turn, the entrepreneur embodies them all--and no surprise. We are in a period of closed frontiers in which young strivers seek new ways to prove themselves. Immigration, at an 80-year peak, has brought to our shores computer whizzes who build companies at Net speed, and even better, make us feel great by reaffirming our belief that anyone in America can make it. Meanwhile, the giant institutions that nourished the Organization Man, an earlier model of success, are in retreat--the military, the factory, and, indeed, the corporation itself. The latter, in shedding white-collar workers in the '90s, delivered a powerful message to those workers' children about the diminished value of loyalty. It's a message the students at Sloan heard loud and clear. The response is a generational update on the '60s mantra "don't trust anyone over 30." They trust only in themselves.
As for the Connecticut Yankee, Americans have always made heroes of tinkerers who brought us "progress," from Eli Whitney to Thomas Edison. Today, figures like Microsoft Corp.'s William H. Gates III or Netscape Communications Inc.'s James L. Barksdale are most familiar. But what really counts is that their products, ever cheaper and more powerful, are the raw material for the entrepreneurial boom--a boom nearly everyone feels they can get in on, one way or the other. You can't ask more of a hero than that.
So, how long will our entrepreneur stay on the pedestal? If it depends on technology alone, perhaps a long time. The experts who peeked over the horizon for us ("2000 Reasons Why the Web Will Rule," page 34) envision an Internet that acts more like a neural network than an information delivery system, one that will increasingly narrow the gap in data resources between small and large businesses. In an economy marked by ever-more outsourcing, project work, and partnering, the opportunities for entrepreneurs should continue to grow. The world our pundits foresee will have small companies connected through high-speed Internet links to clients, suppliers, and each other using maintenance-free software rented over the Web.
The new technologies will breed new business techniques. Small companies will gravitate to what Rutgers University professor Philip Scranton calls "flexible specialization," providing a staggering range of new services in an economy where services already employs 30% of the workforce. But small will no longer mean local. The Web will see small companies increasingly selling goods and services to the world. And even as the Web demolishes some traditional small businesses involved in brokering information--travel agents, for example--new middlemen arise to evaluate the quality of e-commerce sites, say, or provide an electronic meeting ground for consultants and clients. With this creative destruction roiling through parts of the service economy, it's little wonder that the entrepreneurs who seize these opportunities have the glow of the future about them like halos.
Of course, a heroic pose is no insulation against the plain old hassles of owning a company. No matter what your business, labor is scarce, health-care costs are rising, the pressures of balancing work and family are growing--and there's no sign of relief in sight. Yet as we point out ("What Comes Next," page 30), the culture of entrepreneurship can be a plus. Surveys show that small companies are more attractive to many workers because they can adapt more easily to an individual employee's needs. It's the kind of flexibility increasingly demanded of everyone in business today. And the entrepreneur, if nothing else, has the control to make her company do what needs to be done without regard to bureaucratic obstacles.
Control. Wealth. Innovation. Self-fulfillment. Status. Oh, and an economic expansion that just won't quit. Did we mention that? Before you get carried away, we cloud up the blue-sky outlook with our doomsday scenario ("Fun While It Lasted," page 48). Dated March, 2003, it dissects how the wheels fell off the enterpreneurial economy. It's not a prediction, just an alternative view. Millennia ago, the Greek storytellers added a tincture of hubris to their heroes. Can we do any less for ours?