Raising Entrepreneurs

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Author Donna Fenn shares her insights into Gen Y entrepreneurs – their strengths and weaknesses.

Ypulse: What are some of the recurring themes you’ve seen among Gen Y entrepreneurs?

Donna Fenn: I think there are several recurring themes and Upstarts is organized around eight of them. This generation of entrepreneurs is fundamentally different from their older counterparts. Their use of technology is very important, of course, and that’s the first thing that people typically mention about them. But I think that misses the most important point about this generation, which is that they are, first and foremost, highly collaborative – I call them “Extreme Collaborators.” They’re accustomed to team work and I see that in the way they start and grow their companies. It isn’t just that they tend to start companies with partners, but also that they draw upon a huge pool of resources that just weren’t available to older entrepreneurs – college professors who teach entrepreneurship courses (a relatively new phenomenon), parents who are supportive of their entrepreneurial ventures, older entrepreneurs who are willing to mentor and sometimes invest in them. So these resources are readily available and Gen Y entrepreneurs are eager to use them. They’re not afraid to say “I don’t know how to do this; help me.” I think that previous generations prized the romantic image of the “lone wolf entrepreneur.” But the world has changed and Gen Y intuitively understands the power of collaboration and collective knowledge. And yes, they know how to use technology to harness that power. But it’s important to remember that technology is a tool.

YP: How will the economic downturn affect existing and future millennial-run startups?

DF: We’ve seen increases in business startups during the last two recessions and I think this recession will be no exception. In light of massive corporate layoffs, not to mention decreasing levels of trust in large corporations, I think we may see a record number of startups in the coming months. And I think Millennials will lead the way. Because they’re young and relatively unburdened by the financial obligations of their parents’ generation, they’re great at bootstrapping. They don’t mind eating Top Ramen and sleeping on a futon at the office. Recession startups are typically bootstrapped startups, and not companies that need significant amounts of investment capital right out of the starting gate. I don’t think capital has completely dried up, but it’s wildly difficult to get in the current economic environment.

As for existing millennial run companies, I do think that they have a remarkable ability to be agile and flexible and to react quickly to market changes. Their expertise with technology allows them to operate leanly and efficiently. That’s all critically important when money is tight. But in the final analysis, they’re in the same boat as everyone else. They’ll need to find creative ways to cut back expenses, create value for their customers, and differentiate themselves in the marketplace. If they can do that while their competitors are going under, they’ll be well-positioned for success when the economy recovers.

YP: How do Gen Y entrepreneurs differ from entrepreneurs from previous generations?

DF:I think it all starts with, as I mentioned above, collaboration and their use of technology. But there are other notable differences. I’ve noticed that GenY entrepreneurs are more likely to have some sort of social mission right out the gate. Like Tom Szaky, they’re “Social Capitalists.” While older entrepreneurs tend to wait until their companies are established and profitable, young entrepreneurs often want to make a commitment to a social mission right away. For instance, Happy Baby Food pledges to feed a child in Malawi for a day for every package sold. This generation wants to change the world and they’re using entrepreneurship to do it.

Also, I think Gen Y really understands the power of brands and is creating some memorable ones, sometimes in industries that we don’t think of “brandable.” Yes, we’ve got The Hundreds and Johnny Cupcakes – fabulous GenY brands. But there’s also Sittercity, a brilliantly branded web-based company that matches babysitters with families; and Meathead Movers, which uses its employees – mostly college athletes – to distinguish its company from its many competitors.

Gen Y entrepreneurs are also what I call “Workplace Renegades.” Typically, they reject traditional, hierarchical workplaces in favor of more participative, flexible, meritocratic corporate cultures. That doesn’t mean people don’t work hard at their companies; in fact work and life appear to be a kind of 24-7 mash up. They’re treating their employees the way they want to be treated: they’re training them; they’re making the office fun and engaging; they’re providing frequent feedback and meaningful incentives. Frankly, I think Gen Y entrepreneurs and employees are giving us all a new definition of work.

Read the full interview on YPulse.