Entrepreneurship: The New Mid-Life CrisisBy
This is a guest blog by Emily Schmitt, who joined BusinessWeek’s Small Business team and Investing team in June.
An entrepreneurial boom is on its way, but don’t expect it to be led by 20-somethings. Instead, America’s best economic recovery plan is in the hands of those aged 50 and up, according to a recent study by the Kauffman Foundation. The study found that over the past 10 years, most company founders were between the ages of 55 and 64. This goes against the stereotype of the college drop-out entrepreneur á la Bill Gates and Mark Zuckerberg.
So what does this mean for the U.S. economy? Should we expect a decline in productivity if those at the helm of the workforce aren’t as spry as they once were? Not at all, says Dane Stangler, the researcher who put together the study. He says the popular myth of boomers being a burden on the U.S. economy is completely unfounded. “We so often look at this aging population as a huge albatross,” he says. “But really the people who start companies that allow our economy to grow and create jobs are also the most experienced—and generally wealthier.”
The research dovetails on previous work done by Vivek Wadhwa, who found that the average age of tech company founders in the U.S. is 39. Wadhwa, a frequent BW contributor, emphasizes one key takeaway from the new study. He writes in an email that it’s not just that an entrepreneurial boom is ahead, but “it is the old guys, the baby boomers who are going to lead the charge.”
The study lists several reasons for the older ages of entrepreneurs. For one, there’s been a drop in “lifetime” jobs, meaning more boomers are bouncing from job to job. Longer life expectancies account for the older ages, fewer barriers to entry, and lower transaction costs since the dot-com bust make it easier for someone to start a tech company. And then there’s the death of the “too-big-too-fail” mentality. As we see more large firms go under, we may also see a shift toward small businesses—the same ones that drive innovation. And it’s all thanks to the baby boomers.