Hercules. Thor. Gilgamesh. The ancient civilizations that preceded us constructed heroes that spoke to the values of their cultures, with traits that embodied the aspirations of men of the age. But we live in different times, and as a result, have different heroes. Now, it’s all about the entrepreneurial heroics of Mark Zuckerberg, or Steve Jobs or Bill Gates, and their tales of dogged determination leading to nearly unfathomable wealth. It is the American Dream on steroids, and this idolization of the entrepreneurial spirit has created a world where Y Combinators and Embarc Collectives groom and teach would-be Zuckerbergs and Jobs and Gates how to scramble for the success that–more often than not–eludes most who try. Every kid with an idea is not a multi-million dollar business that will succeed. Truly Bold Ideas that create impact are not common.
Welcome to the entrepreneurial bubble. Don’t be surprised when it pops.
A Rose by Any Other Name Is Still a Rose
A bubble exists whenever market values are driven up by artificial means, like public perception, and that perceived value exceeds the actual, intrinsic value. At some point, the market corrects itself and that bubble pops–often with calamitous results. We saw the Dot-Com Bubble wreak havoc. A US Housing Bubble sent the market into a sustained tumble. Before most of us were born, there was a stock market crash that heralded a little fiscal catastrophe called the Great Depression.
Yet despite these harsh lessons of the past, bubbles continue to form, with the latest a product of too much media and not enough common sense. Innumerable seasons of “Shark Tank” and a never-ending stream of TED Talks have made the notion of entrepreneurship glamorous. Worse, it’s made success seem more attainable–an illusion that hides the fact that the vast majority of entrepreneurs fail to “make it big”.
To some, this may just seem like a form of economic social Darwinism, with the strong surviving while the weak die off. But what happens when an entire generation of future businessmen tries to skip over the essential lessons of running a company and go straight to the billionaire stage? What happens when they don’t succeed? Their failures, and the mess their failures leave behind, are something that will have a far greater impact on the economy than a few Chapter 7 and 13 bankruptcy filings.
To paraphrase William Shakespeare, a bubble by any other name is still a bubble.
The Entrepreneurial Spirit, Unchecked and Untamed
The statistics tell a truth that’s hard to accept:
Of small businesses started in 2014, only 56% made it to their fifth year.
Among the top causes of small business failure, 89% failed due to cash flow issues.
And when it comes to venture capital-backed startups, three out of four fails.
However, despite these stats, many are eschewing traditional educational- and business path for entrepreneurship. So much so that colleges and universities have begun offering degrees in the subject. Meanwhile, startup incubators have sprouted up, plucking from academic obscurity those deemed worthy and discarding the rest.
This is the entrepreneurial spirit, unchecked and untamed, and–ultimately–harnessed. But what happens to the majority whose big idea yields no big fruit? For the individual, there can be a host of challenges. On the macro-level, though…
When the Entrepreneurial Bubble Bursts
Imagine a system where success in business involves lessons learned in both the classroom and the boardroom. Now imagine circumventing that system. Instead of allowing for the natural evolution of business sense, and the shaping of ideas through experience, entrepreneurs and their ideas are taken from the vine unripened. And while sure, some of those ideas will be made into something. But what of the vast majority that don’t? What happens to those people whose grand ideas were for naught?
Therein lies the danger of the entrepreneurial bubble, one of human capital more than currency. Because of their path (and subsequent lack of knowledge and experience), those who have failed won’t re-enter the workforce and shake up the world. With the word “failure” written all over their resume, they aren’t equipped to drive businesses to thrive. Even if they were capable, who would give them a chance?
The value of the spirit of entrepreneurship has been greatly inflated.
Don’t get this message wrong. The role of entrepreneurs in our world is large and to be respected. At Bold Business, we look to inspire and assist this activity. Yet too much of anything becomes a bad thing. Excess by its nature creates issues. We are in an entrepreneurial bubble. When it busts, harsh consequences will follow for people, their spirits and the economy.