Good morning, John
I just sent a Twitter survey out to my followers asking them some of their thoughts on starting a business
15% of those over 18 said that they'd already started the business
55% said they had considered starting one.
Only 11% said that they weren't at all interested in starting their own business
But while I think there's a strong entrepreneurial attitude among young people right now
the rate at which we in America are starting small businesses,
and young people in particular, is dropping...
fast.
And the easy thing to do is to put this on young people themselves.
We aren't interested, or we crave the stability of a normal job, or we fear failure.
And indeed the social anxiety, uncertainty, and fear of failure all showed up high up in my survey.
And starting a business isn't for the faint of heart.
You have to take risks you have to jump into stuff that you don't understand or know very well.
You have to do stuff you don't want to do. You have to hire people, and you have to fire people.
A lot of the time it sucks to own a business
I'd say this is a person who owns businesses, like, there's parts that are not super fun.
And I think people know that, but this very clearly isn't just about people making different choices.
As schools have fought to attract students, the cost of education has skyrocketed
And thus so has the burden of student debt and that debt pushes people toward making safer decisions
And maybe toward fearing failure more.
In exactly the same way the skyrocketing costs of health care in America have made people make safer decisions.
When asked what their number one reason for not starting a business was, about half of people said that
that was a personal choice and about half of people said it was something
structural and the biggest structural one of course is just access to capital.
And the money things have gotten kind of weird lately.
A lot more money is coming from venture capitalists,
Who are just like Super rich people.
who basically
want their money to come back ten times
so they mostly invest in tech where there's a lot of opportunity for huge growth. Businesses that
probably have a safer path to a smaller market get ignored and banks are kind of
focusing less and less on the thing that they're supposed to be doing which is to help people create new value in the world.
Community banks now make up just 13% of the banking sector
but they still make 43% of the small business loans.
As starting a business gets more complicated people who have money might see it as
simpler and probably a better use of their time to just invest that money in the stock market.
Meaning in big gigantic entrenched companies rather than in their own small businesses.
And that's especially true if you have a lot of money, and more money is in the hands of people who have a lot of it.
If you have a ton of money starting up a small businesses like an
inconsequential investment in exchange for a whole lot of work.
And then the massive amount of money pumped into the stock market pushes these
gigantic businesses to grow or die, and that results in these massive
behemoths taking over not just old markets
but new markets the way that Amazon and Netflix have done.
Meanwhile in the middle-class wealth has actually decreased
so the people who really want to work their butts off to make a new thing happen
might not have access to the money to do that.
The final reason I'm going to talk about why young people might not be starting
businesses is because I think they are. This is generation 1099, side-hustling contractors.
People making it work with a combination of their podcast, their Etsy store, their post mates, and their day job.
Every one of those side hustles is basically a sole proprietorship.
If you count that way this generation is starting up businesses like never before. But the path to hiring that second person
when all competitive supply chains are global and when employment regulations and business taxes are mountains of red tape?
It's unclear if it's there at all,
and if it is it might just be uninteresting. This isn't a simple story people much smarter than me are doing much better
research than I have done to look at this,
but I want more people
instead of fewer people to know the joy of starting your own thing, of giving somebody else a job, of putting a team together
to create value where there was no value before.
If you've got thoughts on this or advice on this,
or just want to tell us what you would do if you had access to the capital you need to do it,
I'm really looking forward to the comments on this video. I'll be checking them out all weekend.
John. I'll see you on Tuesday