Some of the most influential people in the world are Millennials, a.k.a. those who were born in the ‘80s up to the mid-’90s. Mark Zuckerberg, CEO of Facebook, was born in 1984. Evan Spiegel and Bobby Murphy, the founders of Snapchat, are Millennials, too.
However, except for a select few, the generation succeeding Gen X and preceding Gen Z is not known for being entrepreneurs. In fact, in one survey, Millennials have been declared as the least entrepreneurial generation of all since World War II.
In 2016, only 4% of 30-year-olds are self-employed or entrepreneurial. For comparison, 5.7% of Gen Xers and 6.9% of Baby Boomers reported being self-employed and entrepreneurial when they were in their 30s.
Gen Z is also likely to surpass Millennials. About 41% of Gen Z (born between 1996 and 2010) stated that they aspire to start their own business.
What happened to Millennials? Why did they not become entrepreneurs?
Weighed Down by Debt
One issue that has been plaguing Millennials is student debt. It prevents them from getting a mortgage loan and buying a house. It also stopped them from taking a risk by starting their own business.
When they went to college, they incurred debt amounting to hundreds of thousands of dollars. It takes years, if not more than a decade, to pay off their debt. That is why, despite wanting to settle down, many Millennials cannot afford to save up for a down payment for a house. And, even if they have a desire to become entrepreneurs, they cannot.
Gen Z recognizes how student loans can negatively affect their future. The majority of young people (about 70%) believe that having debt will prevent them from saving up. That is why as much as 38% plan to work throughout college while 24% will pay for college with their own savings.
Being in debt also made Millennials unable to spend time and money in a business. Although, nowadays, it is possible to start a business without capital, Millennials are working side gigs to pay off their student loans.
Children of the Great Recession
Experts also blame the Great Recession for the attitudes of Millennials toward business. Millennials witnessed the brutality of the financial crisis that hit the United States and around the world between 2007 and 2009. Many Millennials graduated from university during that time which meant that they had student loans to pay but could not find any job within their fields. They ended up moving back to their childhood homes and either underemployed or unemployed.
Although the economy has long recovered, the Great Recession left lasting scars on Millennials.
Those who feel financially insecure do not take major risks in their personal lives or careers. Former presidential candidate Andrew Yang wrote in his book The War on Normal People that those who are “depressed, risk-averse” do not start companies.
Startups are risky. They do not all end up becoming Facebook or Google. Most eventually find themselves losing a lot of money.
Not everyone has the privilege to venture into business, fail, and then begin all over again.
Millennials are not homogenous, however. The younger half of the generation is more adventurous. Those who graduated well after the Great Recession and, therefore, did not experience the scarcity of job opportunities were more willing to take a shot at opening their own business, even if the likelihood of failure is ever-present.
Decades-Old Oligopolies as Competitors
Another factor that may be preventing Millennials from becoming entrepreneurs is the existence of oligopolies or massive corporations that own the majority of the market.
Nearly half of all the firms in the U.S. have been established a decade or more than a decade ago. They have the resources to squash every competitor, especially fledgling small businesses.
Amazon, for example, was founded in 1994 and has since become a behemoth in the e-commerce world. It occupies about 49% of the e-commerce market in the U.S. eBay is in second place with only 6.6% of the market.
Facebook, too, is an oligopoly. It was founded in 2004 and has since expanded, gobbling up other social media platforms like Instagram and WhatsApp in the process. In Q3 2020, Facebook earned $21.47 billion.
An aspiring entrepreneur, seeing that they have to compete with goliaths like Amazon and Facebook, would be intimidated. With oligopolies dominating the market, gaining a portion of the market share and building a loyal following is more difficult.
It is not the end of the road for Millennials who aspire to be entrepreneurs. The older portion of the generation are only in their 40s and, therefore, still have time to open their own business. However, they are going to need support to do so.