Creators of the New Economy

The Next Generation

Amateur entrepreneurship is over. THE PROFESSIONALS have arrived

I recall how sorry I felt for one of my schoolmates in 1956 when she told me that her dad had no job. He owned a company instead. We drove past the building once--a sad, single-story brick structure with venetian blinds in the windows. Even the name, Colbert Enterprises Inc., spelled out in metal letters over the lintel, seemed unfortunate to my 1950s sensibilities; it implied that my friend's father could be doing anything in there.

Socially, entrepreneurs simply didn't count for much during the middle of this century, and that's putting it nicely. Not many American parents who came of age during the Great Depression wished that their sons would become entrepreneurs or that their daughters would marry them. If entrepreneurs weren't actually disreputable, they were nonetheless suspect. They were the cultural misfits of business. That's not to say that there weren't entrepreneurs starting companies during the 40-year stretch that began in the 1930s--think of Henry Kaiser, of Kaiser Steel, or of Bill Hewlett and Dave Packard, who came later--but entrepreneurs weren't what America was celebrating.

During the depression and Dust Bowl era, my parents and their friends lionized the noble poor and went to the movies to forget their own problems. In the '40s, the collective American mind was on the war. And in the '50s and '60s, American men put on their gray flannel suits or tucked union cards into their pockets and went to work. Many of the women, meanwhile, became stereotypical moms.

Yet ask any group of businesspeople today whether they consider themselves to be entrepreneurial, and, says Harvard Business School's Bill Sahlman, professor of business administration and senior associate dean, "most of them will raise their hands. That doesn't mean that they are entrepreneurial, but they would certainly not like you to think they aren't."

It is clear that something has changed. Entrepreneurship achieved cult status in the '80s and has become de rigueur in the '90s. "The public's perception of people who start their own companies has dramatically improved. They're not outcasts anymore," says Sahlman. "They're in the mainstream." But something not so obvious is happening, too. A new group of people is emerging out of the swelling entrepreneurial mainstream: genuinely professional entrepreneurs.

Inarguably, Americans are starting businesses today at a dizzying rate. A study by the Entrepreneurial Research Consortium finds that more than 35 million U.S. households--roughly one in three--"have had an intimate involvement in a new or small business." Paul Reynolds, professor of entrepreneurial studies at Babson College and the consortium coordinator, finds that number astonishing. "It's twice the level I expected," he recently told a Wall Street Journal reporter.

But the mainstreaming of entrepreneurship in the United States isn't very surprising, considering that for the past 15 years or so there has been growth in both motive and opportunity. First, let's look at motive.

The downsizing of large, established corporations has given many people reason to think about starting their own companies. "The notion that smart people could join a big firm and be assured of making continuous progress and feeling good about themselves has largely disappeared," observes Howard Stevenson, a Harvard professor who wrote his first entrepreneurial case study more than 30 years ago. "I don't think anybody who's got a brain feels that assurance today. So they look around and see that entrepreneurship is an alternative. They think, 'If I own a $10-million business that makes 6% in sales, I'm making $600,000 a year. How many people in my company make that?' Smarter and better-educated people are looking at entrepreneurship as a better use of their skills."

Likewise, it has dawned on members of the baby-boom generation that not all executive aspirants are going to find themselves in corner office suites. There isn't room. When the early '80s brought the very public successes of company builders such as Apple cofounder Steve Jobs, entrepreneurship began to look like a materially rewarding alternative. The much-chronicled entrepreneurial lifestyle--beer blasts on Friday afternoons and a new BMW in the driveway--didn't sound so bad, either.

As for opportunity, globalization--the increasing permeability of national boundaries to the flow of technology, trade, capital, information, and ideas--now demands entrepreneurial behavior from companies large and small, old and young. Information technology itself has erased much of the advantage that large, asset-rich companies have long held over small, capital-starved start-ups. In fact, today's start-ups might have seized the advantage in many cases, being unencumbered by the clunky technology that old capital acquired and had to work with. Consider also the now well-established entrepreneurial infrastructure that has been constructed in the United States over the past 20 years. More people and institutions--from bankers to real estate agents, from accountants to office-furniture suppliers--know how to recognize and support promising entrepreneurs. If they don't, they're ignoring a sizable chunk of business. The trend includes venture capitalists: an article in the January 25 issue of The Economist, "Venture Capitalists: A Really Big Adventure," rhapsodizes over the ability of Americans to move capital quickly into the hands of people with promising but risky business propositions.

Out of this happy confluence of motive and opportunity have come millions of independent business owners and the prototype of a new business practitioner--someone different from the corporate manager and the small-business owner. That someone is the professional entrepreneur.

People who flout prevailing cultural norms often take pride in their idiosyncrasy--maybe even brag about it. The traditional entrepreneur was stereotypically a male, usually lacking significant educational credentials, who operated from the gut. He followed no plan and did things his way. He took risks, and what he built, he owned. In his company, he made the rules. Employees could choose: they could do what the boss said, or they could leave. The entrepreneur didn't expect bankers--or anyone else, for that matter--to understand what he did because entrepreneurs were, after all, born, not made. Entrepreneurship was an art, and entrepreneurs were artists.

But we have made a discovery. Little by little, over the past 15 years or so, we have come to realize that entrepreneurship--stereotypes notwithstanding--is not wholly art, any more than, say, medicine is. We'd all like our surgeon to have a knack for his or her trade, but most of us feel a lot better knowing that he or she has also gone to medical school. Likewise, a great deal of what entrepreneurs do can be taught, learned, and practiced. In fact, management sage Peter Drucker argued a dozen years ago that entrepreneurship, as distinct from entrepreneurs, hadn't even been invented until people began to study it. "Look," he said in an interview with Inc. in October 1985, "if you can't replicate something because you don't understand it, then it really hasn't been invented, it's only been done."