It’s a new entrepreneurial age for young people
What do Facebook, ModCloth, Mashable, Rent the Runway and LivingSocial have in common?
The same thing that Groupon, Dropbox, Twitter, WordPress, and Foursquare have in common. All of these companies, and hundreds more every month, are a part of the Generation Y entrepreneurial boom. That is to say, they were all founded by young adults under the age of 30.
Take Dave Hartmann, 22, a recent graduate of Penn State and founder of Blistt, an online travel hub he began during his final two years in college. “I basically got to a point where I didn’t know what I wanted to do,” he said, “but I always wanted to be an entrepreneur.”
The idea for Blistt was born in 2010 with the vision of bringing together groups of adventure-seekers and matching them with opportunities to do what they love locally with like-minded people. The website, Blistt.com, is essentially a social network for fans of travel and extreme sporting. “It’s Facebook, on Red Bull,” said one user.
Blistt provides users with a profile on which to list all of their accomplishments to date (“My Life”) and those on their “bucket lists,” from which the name “Blistt” was derived (“My Blistt”). Hartmann, himself a finance major, faced the interesting dilemma of not knowing the first thing about Web programming, but knowing exactly what he was passionate about: starting his own business.
“The Internet really allows for young entrepreneurs to try out their ideas,” Hartmann said. “I had to think to myself, what is my ultimate goal in life? And I realized it was not to make a ton of money, but to fill my life with as many accomplishments and experiences as possible. Now I go skydiving, bungee jumping – you name it. I asked myself if this is what I want to do with my life, how could I do it?”
Long hours and several business partners later, Blistt was up and running, providing a place for users to share their adventure dreams and to discover bucket-list-worthy travel excursions (“Big Cat Encounter” in South Africa, anyone?).
This entrepreneurial spirit has come to characterize the newest players in the American workforce – Generation Y. And despite, or perhaps in spite of, the recession, this generation has seized the opportunity to harness their unique skills, to see their own ideas realized, and to determine their own futures by beginning their own start-up companies pre- and immediately-post-grad.
The entrepreneurial bug
“We have more undergraduates than ever before on our database,” said Linda Feltman, the Director of the Small Business Development Center (SBDC) at Penn State’s Innovation Park. “We’re seeing more students seeking our services over the past two or three years from all kinds of majors.”
According to a 2010 study by the Kauffman Foundation, the world’s largest foundation dedicated to entrepreneurship, about 565,000 new businesses are begun each month. More and more, experts are witnessing the growing trend of youth under 30 years old founding these very businesses.
“I believe we’re seeing both a greater interest nowadays, and [a] cheaper [means to start up],” said Dr. Robert Macy, Director of the Farrell Center for Corporate Innovation and Entrepreneurship at Penn State. Macy is also a co-director at the Center for Penn State Student Entrepreneurs and the director of the Penn State student innovation incubator, Lion Launch Pad.
“I have seen a dramatic increase in the number of entrepreneurs in their twenties,” Macy explained. “It’s capital-efficient. Where it used to cost maybe two million [dollars] to start up twenty years ago, it cost about twenty thousand [dollars] ten years ago, and costs around two hundred [dollars] today.”
According to the Kauffman Foundation, four in 10 young people ages 8 – 21 have or would like to start their own businesses.
“GenY’ers have grown up watching Facebook and YouTube [both started by men in their twenties] blow up,” said Blistt’s Hartmann. “We see a twenty-four-year-old become a millionaire overnight … that’s inspiration enough for us.”
Rick Harrison, 23, conceived of his startup, NineRobot, with two friends over a beer at a local bar during his tenure as an IT and Economics major at Penn State. NineRobot began as a solo mobile application development company in the winter of 2009 – Harrison’s senior year – creating apps for clients such as Zappos.com. The company has since merged with San Diego-based start-up Sincerely, to create apps like Postagram and PopBooth that allow users to share gifts and facilitate relationships with loved ones.
“Our culture [in America] has definitely shifted in favor of entrepreneurs,” Harrison said. “Entrepreneurs used to be considered these off-the-rocker, left-field guys, but now there are a lot more start-ups with, for example, the [advent] of the iPhone.” Anyone can create a smartphone application, he said with a laugh.
One may presume that the start-up spirit would suffer in the midst of a recession, as more people may seek the job security of an eight-to-five job and all of the benefits that come with it. But, in fact, the opposite seems to be true of this new young generation of go-getters. “I think we’re getting more students who are thinking, ‘You know what, I might not get a job,’ and that life isn’t like when their parents grew up, and they won’t automatically be better off,” said Feltman.
Jon Tornetta, 21, co-founder of the Penn State-based group, InnoBlue, which promotes student innovation and entrepreneurship outside of the classroom, concurs. “There’s a lot of interest [in start-ups] now because, if you look at the economy, starting your own thing [makes sense.] If people like your idea, [the economy] doesn’t even matter.”
As evidence, some of the world’s best-known companies – Microsoft, Disney, McDonald’s, Johnson & Johnson – were founded during recessions, depressions, or bear markets. And with more than one-third of all job creation owing to the entry of new businesses (according to the Kauffman Foundation), this entrepreneurial spirit is promising for a country in need of an economic stimulus.
“Besides being more worried about not finding a job, I think students are also finding that they don’t know exactly where they want to go [after college],” said Hartmann. “But they do know what their passions are.” So these young adults set off on the journey of a lifetime while they’re still slightly green in order to bring those passions and ideas to life.
A New World of New Resources
A significant difference in today’s culture is the growing number of resources available to potential entrepreneurs that was either unknown or unavailable before. Micro equity finding agencies, angel investors, start-up competitions – the environment has never been more friendly to young people attempting to start out on their own.
Even universities are hopping aboard the entrepreneurial wagon to offer students outlets for pursuing their innovative ideas. “Over the past couple of years, Penn State University has made entrepreneurship a part of the curriculum,” said Feltman of the SBDC. “We started slowly adding it in 2003, and at the time it was groundbreaking! No one was teaching this stuff in class.”
Universities’ encouragement of student entrepreneurs can be seen all over America. Penn State, itself, offers classes in social entrepreneurship and small business management, as well as a TEDxPSU and Global Entrepreneurship Week to encourage the sharing of innovative ideas. The University of Wisconsin-Madison renovated an old building downtown to produce its 10-suite Metro Innovation Center specifically for student businesses. Howard University runs a Black Marketplace every other Friday, where student entrepreneurs can sell their products and services to the community. And the University of Nebraska offers students many opportunities to be exposed to entrepreneurship, such as the Nebraska Summit on Entrepreneurship, the Heartland Conference of Free Enterprise, and the New Ventures Competition, which brings in young entrepreneurs from all over the world to compete for grants.
At Penn State, groups have recently sprouted up at a steady rate in many colleges for any kind of entrepreneur. The Lion Launch Pad, which began in 2010, supplies finances and alumni mentoring to students with innovative ideas. InnoBlue, also formulated in 2010, is more about building relationships, and brings people together in an encouraging environment with weekly seminars and speakers.
“Blistt was the first student company at InnoBlue,” said founder Dave Hartmann. “They put us in touch with a lot of people, and set up a Demo Day where [my business partner and I] pitched Blistt to about a hundred people and about ten investors, where we got an offer for a $150,000.”
When it comes down to it, however, the greatest advantage that student entrepreneurs are able to leverage over the older generation is a convenient network right at their doorsteps. “Penn State is an environment where anything is possible,” said Hartmann. “You’ve got a lot of people in a confined space with time on their hands, which is an amazing opportunity.”
NineRobot founder Rick Harrison found Penn State’s resources to be helpful while he was on campus, but agreed that nothing was more valuable than the chance the school provided him to expand his network. “The most important thing in entrepreneurship is your team, which will stem from your network,” he said. “Penn State itself was a great environment to meet other people.”
Of course, that isn’t to say that this new entrepreneurial generation isn’t also experiencing some age-old challenges to starting a small business. “The biggest barrier is financing,” said Feltman. “Of course, if it’s a small investment – a couple hundred dollars – students will most likely put it on mommy and daddy’s charge card, or put their student loans towards their company instead of textbooks. But if it’s tens of thousands of dollars, students for the most part have no credit history to secure traditional bank loans.”
“There’s also the problem of exposure,” Macy added. “It’s hard to get the word out.”
Blistt is feeling these challenges first-hand. “Getting initial traffic to the site is hard,” said Hartmann. “When it comes down to it, we just don’t have the funding.” Blistt, born fairly recently, operates with five employees out of Hartmann’s apartment in Hoboken, N.J., for now. Hartmann hopes to expand the business by connecting with a larger site to which Blistt might lend its social networking value.
One way young entrepreneurs are alleviating this stress is by finding mentors who have experienced it before. “I met my mentor while I was at an internship at AccuWeather,” said NineRobot’s Harrison. “He used to be a financial advisor on Wall Street, and he helped us find a corporate lawyer and accountant so we [at Nine Robot] could focus on making great products.”
Feltman knows from personal experience the importance of reaching out to an un-invested mentor. Within their first five years 85 percent of businesses fail, she said. But if entrepreneurs work with a mentor, that number is down to about 20 percent.
“It’s very important to reach out and find a mentor,” she said. “And he can’t be one of your best buddies. He must be someone who doesn’t have a vested interest in your venture… someone who’s willing to tell you the baby’s ugly.”
Generation Y: “What can I do for the world?”
The insecurity of life in the age in which GenY grew up may contribute to this mindset. “Generation Y has a different focus than the generation before it,” said the Farrell Center’s Macy. “They’ve grown up with horrible things happening around them, all at random times. ‘Terrorism’ has become a ‘thing’ that it never was before. So these kids are saying, ‘I want to make a difference in this world while I’m still here.’”
Generation Y has grown up with a lot of external adversity, but even more internal support, Feltman said. “GenY’ers see the economy and have the collective guts to say this is not the way things are supposed to be,” she said. “And so, besides having the chance to make themselves known, they want to give back. A lot of the young businesses I see have this social responsibility mentality.”
Perhaps its biggest character advantage is that this generation is not afraid to take a chance and put itself out for scrutiny. “We were brought up being told we could do whatever we wanted to do,” said Blistt’s Hartmann. “Past generations didn’t have this mindset. But things gravitate toward you when you go out on your own.”
Hartmann remembers the minor ordeal he went through finding a web developer to launch his idea for Blistt. “I put on a pair of slacks and a button down shirt and walked around the Information Sciences and Technology (IST) building on campus passing out fliers,” he said, chuckling at the memory.
Once he found a partner, he then marched straight over to the IST internship coordinator, pitched his idea for Blistt, and asked for interns. “At first she was a little hesitant, but she eventually agreed,” he said. “We had our own booth at the IT career fair and held 60 interviews for internships that first year!”
This positive, one-tracked mindset is one that experts agree GenY’ers share widely – a mindset that no doubt bolsters all manner of successes that they enjoy in life. “[Generation Y] has a great tolerance for ambiguity,” said Macy thoughtfully. “And they have an innate belief that they can do things. They think, ‘I won’t just let the world do stuff to me. I’m gonna do stuff to the world.’”
Blistt is currently in a transition stage, strategizing its next big move, Hartmann said.
“I started off saying that it doesn’t matter to me if Blistt takes off like Facebook, or jumps off the face of the earth,” Hartmann said. “Literally, anything is possible. But the experience will be invaluable.”
He still holds to this philosophy, adding, “The best part is meeting the most amazing people on your journey.”
Hartmann realizes how fortunate he has been in the opportunities he has attained through hard work and an excellent team. “This is something so many people never experience,” he said, his voice betraying his passion. “And this is the way I’m able to motivate the team. We’ve all really embraced this mentality, and this is how we stay energized.”
“It’s been a roller coaster,” Hartmann said with a not-unpleasant sigh. “But if you really immerse yourself in it, the ride is fantastic.”
(Michelle Asmara wrote this story for Comm 462.)