They are collaborative, creative, and -- above all -- confident. And all of them were born after October 31, 1978.
They are collaborative, creative, and -- above all -- confident. And all of them were born after October 31, 1978.
Millennials -- a.k.a. Generation Y, a.k.a. echo boomers -- are widely characterized as spoiled, impatient, and narcissistic. Their childhood bedrooms overflow with trophies earned just for showing up. Raised on a diet of adoration and encouragement, they enter adulthood rosy with entitlement. As they swarm into the workplace, their hair perpetually mussed from the wind stirred up by helicopter parents hovering nearby, companies worry how to accommodate their outsize expectations. Merrill Lynch (NYSE:MER) sponsors a Parents Day for summer analysts, so Mom and Dad can ensure their offspring are well cared for by their new work families.
As a CEO, you may wonder how to absorb such difficult young people into your company. But here's a better question: How do you compete with them? Because they are starting some fascinating companies.
Dismissing the latest crop of twentysomethings as navel-gazing screen-a-holics is a mistake. This generation, at nearly 80 million strong, is poised to be the largest, the most educated, and the most diverse in American history. That gives its members special insight into the largest, the most educated, and the most diverse market in history. They are also fearless about technology. The kids of the '80s grew up with computers; the kids of the '90s can't recall (and shrink from imagining) life before the Internet. And they are idealistic and optimistic -- traits that influence their perceptions of business. Steve Jobs and Mark Zuckerberg are their heroes. And when they think of corporate America, they think of Office Space and maybe Enron. Were these guys born to be entrepreneurs or what?
As for being spoiled and narcissistic: I have yet to meet an entrepreneur of any age who isn't supremely confident, easily distracted by new ideas, and proud of being unemployable by ordinary companies that insist on coloring inside the lines. Entrepreneurs believe they can do anything. That belief is no less powerful for having been hammered in by their parents.
But, yes, Millennial entrepreneurs are a breed apart from those who came before. The ways in which they start companies -- and the companies they start -- reflect those distinctions.
The most significant differences arise from growing up wired. Say what you will about Facebook and MySpace; those who frequent them accept communal action -- including communal idea generation -- as the norm. Millennials are, in general, far more open and collaborative than their older counterparts. The iconic image of the lone-wolf entrepreneur holds little romance for them. Instead, they start businesses with partners -- in some cases with entire teams. Etsy, a Brooklyn, New York, website, is a virtual crafts fair at which artisans market handmade walnut coffee tables and lamps made out of vintage glass coffeepots. Co-founder Rob Kalin, an aspiring classics professor, came up with the idea in 2005 and partnered with two techies whom he met in college to launch it.
Millennials also like to build elements of community into their businesses. Matt Mullenweg's wildly successful software company, Automattic, which handles blogs for CNN and The New York Times, began as an open-source project to create better blogging software. Then a teen with no experience in software development, Mullenweg recruited volunteer coders who built, tested, and refined what has become WordPress -- one of the most popular blogging platforms -- all for no pay. Anyone can contribute to the code (so far, hundreds of people have done so), and anyone can download the software for free. "We're democratizing publishing," says Mullenweg.
And, yes, Millennial entrepreneurs are often impatient. (Inc. was even scooped by Bobby Kim of The Hundreds, who blogged about this article and who would be mentioned in it about six weeks before it hit newsstands.) But why shouldn't they move fast? Many start either Web-based or service companies whose barriers to entry can be quite low. And their customers -- particularly those customers who share the founders' demographic -- don't blink at beta. In fact, many Gen-Y entrepreneurs, infused with the aforementioned communal spirit, rely on feedback from early users to improve their offerings. Rather than sweat over business plans, they throw out something rough, then tweak and experiment. Xobni, co-founded by Adam Smith and Matt Brezina, hopes to transform Microsoft (NASDAQ:MSFT) Outlook inboxes into social networking tools. Early on, the founders routed users through a welcome page that humbly noted the product wasn't perfect and asked for feedback. It's company building as class science project.
Millennials are the most globally minded generation since the one that invented Earth Day. Making the world a better place is sometimes an element in their mission statements, sometimes their founding principle. Meraki, for example, which is backed by Google, builds mesh Wi-Fi networks that provide free or low-cost Internet service to poor communities. MIT student Sanjit Biswas tested the model in a low-income housing development in San Francisco; Meraki is now expanding into India, Africa, and Latin America.
The Millennials may resemble their '60s counterparts in idealism. But unlike counterculturalists, they do trust people over 30. Accustomed to the nurturing and guidance of their parents, Gen-Y entrepreneurs are receptive to the advice of older, successful company founders who were minted in droves during the '80s and '90s.
Brendan Ciecko, founder of Web design firm Ten Minute Media, has three mentors, all more than a decade older than he is. One helps Ciecko think about the business of technology. Another one advises him on intellectual property issues. A third is his social responsibility guru. "It was really surprising to me that people like this would be willing to take time out from their own businesses to talk to me once or twice a month," says Ciecko. Smacks of entitlement, doesn't he?
So Millennials get by with a little help from their friends, their parents, and their mentors. But they also draw on an unprecedented formal support system that grew up, like them, in an era of fascination with entrepreneurship. This infrastructure now serves a demographic that is intellectually prepared and temperamentally inclined to exploit it.
Much of that support system, not surprisingly, is university-based. Millennials start companies in dorm rooms while studying the subject of starting companies in classrooms. Approximately 2,100 colleges and universities offer at least one class in entrepreneurship, according to a 2006 study by the Ewing Marion Kauffman Foundation, and the discipline has sprouted more than 400 endowed chairs. Many schools also sponsor business plan competitions. Nate Alder, a student at Brigham Young University, has won first or second place in 11 competitions over the past year for his company, Klymit, which has developed a way to insulate outerwear and outdoor gear using argon. Alder racked up $200,000 in prize money, potential strategic partnerships, and recognition in the national business press before he even had a product to sell. (See: Gen Y, impatience of.)
Business incubators, too, are contemporaries of the Millennials. Though incubators have been around since the 1950s, there were only 12 in the United States in 1980 -- but more than 1,400 by 2006, according to the National Business Incubation Association. Some newer incubators are particularly conducive to the kind of support and collaboration on which Gen-Y entrepreneurs thrive. For example, Y Combinator, in Cambridge, Massachusetts, funds start-ups in batches. Each class starts and finishes at roughly the same time, encouraging group learning and support. The founders of Xobni are among the promising Y Combinator grads.
"One thing that differentiates the young founders is who they can connect with early on," says David Cohen, executive director of TechStars, a Boulder, Colorado, incubator that works with Millennial company founders. "People are starting companies at young ages. They fail fast, learn a lot, and keep going."
That's another trait of Gen-Y entrepreneurs: They are comfortable with a business world in constant flux. For Millennials, change isn't something to manage; it's something to relish.
Profiles reported by Max Chafkin, Donna Fenn, April Joyner, Ryan McCarthy, Kate Pastorek, and Nitasha Tiku
Current Venture: Pownce, a San Francisco start-up that combines elements of blogging, instant messaging, and file sharing. Friends can use the software to send one another messages or trade files.
Why She's One to Watch: When Culver described the idea to her then-boyfriend, the creative director at the popular website Digg, he replied that his boss, Kevin Rose, was pursuing a similar concept. The three joined forces to launch Pownce, and Rose's involvement prompted buzz. Weeks after Pownce's debut, The New York Times proclaimed it "the hottest start-up in Silicon Valley."
The Backstory: "I didn't grow up with computers any more than your average suburban kid," says Culver, 25. "I wanted to be a graphic designer, but I sucked at design." So reluctantly, she majored in computer science at the University of Minnesota.
Sample Budget Item: $700 for beer for the launch party
On Being a Young CEO "When we hit 90,000 users, I remember thinking that Pownce was bigger than my hometown."
Current Venture: An avid skateboarder, Kim hated the women's boarding sneakers then available -- "Pink, puffy pastel things that you couldn't even skate in," she says. Keep, the Los Angeles -- based line of footwear she created, aspires to be chic and "cruelty free," which means that Kim, 29, doesn't use leather and monitors conditions in her factories. Sales are approaching $2.5 million.
Why She's One to Watch: Kim mixes an elegant aesthetic and top-notch branding skills. A Stanford M.B.A., she began her career at Faith Popcorn's trend-forecasting company, where Kim developed youth-marketing campaigns for Tylenol and Campbell's Soup. She enjoyed the work but felt a bit like a sellout. "I thought, Wouldn't it be great to have a business that actually came out of the culture, as opposed to helping a big company see what young people want and spin it back at them?"
On Being a Young CEO "I think the key is energy management. Passion comes quickly to the inexperienced, but having a lasting commitment is a different story."
Current Venture: Etsy, a vast website that helps artisans sell handmade clothing and crafts. The Brooklyn, New York, business processes 20,000 orders a day, at an average sale of $15. The site charges a listing fee and takes a small commission on each transaction.
Why He's One to Watch: In just three years, Etsy has attracted 200,000 sellers, a million registered users, and more than $27 million in funding.
The Backstory: The son of a Boston furniture maker, Kalin flunked out of high school, briefly enrolled in an art school, and then faked an MIT student ID so he could take classes on the sly. He so impressed the professors there that they helped him get into NYU, where he learned how to build a website. In 2005, he launched Etsy with two classmates.
After Hours: Kalin is learning to sew.
What's Next: Kalin, 28, stepped down as CEO in July, though he remains actively involved as Etsy's chairman and chief creative officer. "A lot of companies are started and prepped for an acquisition," he says. "But I hope this will be an independent company for hundreds of years."
Current Venture: Ten Minute Media, a Holyoke, Massachusetts, company that creates websites for music industry clients, including Mick Jagger, Katy Perry, and the reunited New Kids on the Block. The business is on track to do $450,000 this year.
Why He's One to Watch: Ciecko's break came in 2001, when he won a fan contest to create a Flash webpage for the website of the punk band Slick Shoes. Sony BMG, Warner, and Universal saw Ciecko's work and hired the then-13-year-old to build sites for their artists. Given the music industry's travails, he is moving into the corporate market with clients such as MassMutual (NYSE:MCI) and Clear Channel (NYSE:CCO) in the pursuit, he says, of "major scalability."
Employees: None; he works with 20 freelancers, many of them in Eastern Europe.
What's Next: Ciecko recently bought a large building in Holyoke, the mill town in which he grew up. He plans to develop the space into an art gallery, a music venue, and a business incubator.
On Being a Young CEO "When all my friends were getting ready to go back to school, I met with Mick Jagger to talk about his website. And I just had to laugh."
Current Venture: Niche, a St. Louis restaurant that will gross $2.6 million this year
Why He's One to Watch: Craft's penchant for experimentation can be seen in the menu, which features fried pig's head and lamb with white chocolate hummus. "He's a pioneer in terms of both food and location," says Dana Cowin, editor of Food & Wine magazine. "Niche has a minimal, modern feel, which might have been a risk in a historic St. Louis neighborhood. Its success is a tribute to how good the food is."
The Backstory: Craft dropped out of culinary school ("I never did well in the classroom -- I got bored") to work at a car wash and a pool hall. He eventually returned to the kitchen, first working a series of restaurant jobs and then raising Niche's seed money from his brother and parents.
What's Next: Craft, 29, recently opened Veruca, a café and bakeshop, as a creative outlet for his pastry chef. He hopes to expand the business further: "I would love to see a brand of Niche with talented chefs that put out good food and make fine dining more approachable."
A Confession: "I'm dying to be on Iron Chef."
Current Venture: Tumblr, based in New York City, has built an online community around a blogging tool that lets users post short entries, Web links, and music and video clips. The site's 400,000 members have a knack for generating buzz. Dating columnist Julia Allison parlayed her Tumblr posts into a deal to do a pilot reality show for NBC, for example.
Why He's One to Watch: At 15, Karp dropped out of Bronx Science to be homeschooled so he could work full time. At 17, he took a job as the community manager at a parenting website. He overhauled the message-board functions, and traffic skyrocketed. After that, he started Tumblr, which raised a small amount of VC money in 2007.
What's Next: Tumblr plans to roll out a paid "pro" version of the application that has new content management features.
On Being a Young CEO "It's never quite clicked with me that I'm part of any particular age group," says Karp, 22. "I've always been hopping between age groups, and I've had a hard time picking up on where I fit in."
Current Ventures: WordPress.org, a nonprofit that makes open-source blogging software; and Automattic, a for-profit company that manages and customizes the WordPress software for clients such as News Corporation and CNN
Why He's One to Watch: Mullenweg, 24, turned down a $200 million offer for Automattic, opting instead to raise $29.5 million from The New York Times Company and two venture capital firms.
The Backstory: Mullenweg began building WordPress when he was 18, with the goal of making easy-to-use software that would "make your blog look really good -- and, ideally, even get you laid."
On Being a Young CEO Early on, "it was kind of weird to be at a business party and be the only person who couldn't drink. I try to have a little facial hair so I look older."
Current Venture: Music Is My Business, an Atlanta company that matches performers with marketers at clients such as Heineken and ESPN and produces original music and animation
Why He's One to Watch: Chris Brown's recent hit "Forever" -- which doubled as a Wrigley jingle -- has stoked marketers' interest in wrapping slogans around song lyrics. Arnold, 29, who worked as an unpaid intern for Sean "Diddy" Combs at Bad Boy Entertainment, is taking advantage of the trend.
The Backstory: Combs repaid his former intern by supplying Bad Boy's Danity Kane to perform at a concert sponsored by ESPN, Arnold's first client. "My first check came from Puff," he says.
Klymit, in Ogden, Utah, is designing a technology to adjust the temperature of cold-weather gear like ski jackets and tents by pumping argon or another harmless gas into the lining, just as cold-water divers rely on tanks of argon to stay warm.
Why He's One to Watch: Alder, 27, has won $200,000 at collegiate business-plan competitions, and he is partnering with Descente, a sports gear company, on a product field test.
The Backstory: Alder came up with the idea while on a diving trip to Brazil. Before launching Klymit, he admits, he knew little about basic chemistry. "I thought argon was just a character in The Lord of the Rings," he jokes.
Current Venture: Smith co-founded Xobni with Matt Brezina (see next page); the company's software organizes the information contained in a Microsoft Outlook e-mail account to make it easier to search.
Why He's One to Watch: At a developers' conference last February, Bill Gates hailed the San Francisco start-up as "the next generation of social networking." Some 14,000 people with Microsoft corporate e-mail addresses use the software, and Microsoft has even reportedly made an offer to buy the company. For Smith, a 23-year-old MIT graduate, Microsoft's interest is especially meaningful. "Bill Gates was a hero of mine," he says. "When I was a teenager, I sent him a logic puzzle to solve." Gates didn't complete it, but his office sent Smith a nice thank-you letter.
Current Venture: Mint.com, based in Mountain View, California, helps 450,000 users organize bank accounts, credit card statements, and investment information. The site suggests ways to save money on fees by selecting another credit card or brokerage account; banks pay Mint.com for the referrals.
Why He's One to Watch: Patzer, 27, has raised $17 million and gives one of the best elevator pitches around. "After 10 minutes, I said, 'I got it. I'm in,' " says Ram Shriram, a Mint.com investor who also backed Google (NASDAQ:GOOG). Patzer once demonstrated an early version of the site for venture capitalist Josh Kopelman using a battery-powered server that Patzer kept in the trunk of his car.
Current Venture: Borrego Solar Systems, based in San Diego, designs and builds solar panels. CEO Hall was a baby in 1980 when the company was founded; in 2001, he wrote a turnaround plan for Borrego for a class at Northwestern. Borrego's owner (a family friend) then let Hall put it into effect.
Why He's One to Watch: In 2006, California pledged $3.3 billion to encourage residents to install solar panels on their roofs. Hall has six offices in the state and accepts energy tax rebates as partial payment. Revenue is set to hit $60 million.
The Backstory: Hall, 29, learned strategy at the blackjack table. When he was in college, a friend of his father's paid Hall $10 an hour, plus 10 percent of the profits, to gamble with the friend's money.
Current Venture: Co-founded Xobni with Adam Smith (see previous page)
The Backstory: The partners met in 2005, when Brezina, a grad student at the University of Maryland, posted a roommate ad on Craigslist, and Smith answered it. The two became friends, and Smith persuaded Brezina to help him launch Xobni. "I thought, I'm not liking grad school too much, and this girl just broke my heart, so I decided to change my life," says Brezina, 28.
On Being a Young CEO "Raising money is hard when you're in your 20s and you're asking for $3 million to $5 million when you've never managed more than $10,000 at a time."
Current Venture: Co-founded with Ben Shenassafar (right) The Hundreds, a company in Los Angeles with a clothing line, three retail stores, and an online magazine. Sales are on track to hit $4 million this year.
Why He's One to Watch: The Hundreds enjoys a rabid following. When the company opened its first store in San Francisco this year, it was mobbed.
What's Next: A deal with Disney. After The Hundreds paid homage to the Lost Boys characters from Peter Pan in a few designs, Disney approached Kim, 28, to talk about a line of Lost Boys streetwear. The Hundreds is pursuing the project eagerly and without irony. "Disney is a huge part of American culture," says Kim, "so being involved is a great opportunity."
Current Venture: Imeem, a social networking site in San Francisco that lets users listen to music and watch videos for free. More than 27 million people visit the site each month.
Why He's One to Watch: Caldwell, 28, beat out MySpace and Facebook to sign deals to share online ad revenue with all the big music labels, a coup that landed major advertisers such as Apple and Toyota. Ted Cohen, a board member and former EMI exec, says Caldwell succeeded where others failed because "he has no ego, and he gave the labels confidence that this was a true partnership with long-term revenue expectations."
On Being a Young CEO "I've been doing this nonstop for four and a half years. I actually feel kind of old."
Current Venture: Co-founded The Hundreds with Bobby Kim (left)
The Backstory: Shenassafar, 28, met Kim at Loyola Law School, and together they came up with the idea for The Hundreds. "I was 100 percent sure I was not going to practice law," says Shenassafar, who put off studying for the California bar exam to pack boxes in the company's warehouse.
What's Next: The Hundreds plans to open two or three more retail stores in 2009.
Current Venture: Meraki sells low-cost wireless routers that allow telecom companies in developing countries to charge $10 a month or less for Internet access.
Why He's One to Watch: Biswas, 26, has raised $25 million from Google and Sequoia Capital; has won an award at Davos; and has elicited praise from Nicholas Negroponte, the head of the One Laptop per Child program. "Meraki allows communities to grow their local infrastructure at costs that are orders of magnitude smaller than what is normally expected," Negroponte says.
The Backstory: Meraki began as a project to provide free Wi-Fi to MIT grad students.
Smart Move: Without aid or approval, Meraki put up a test network in San Francisco that now has 100,000 users and serves as a huge ad for the company. "It really helped people connect the dots," Biswas says.
Current Venture: K4 Solutions, a federal contractor specializing in IT work, based in Falls Church, Virginia
Why She's One to Watch: Krishnan landed her first government gig -- a contract to create a database of images for the Bureau of Alcohol, Tobacco, and Firearms -- seven years ago, when she was a senior at Virginia Tech. After graduation, she took a job at the Patent Office but eventually quit. "You can't do it part time and expect your company to grow," she says.
What's Next: Krishnan's status as an 8(a) certified business should last for another six years, but she is already planning for the day when her company outgrows it. She has gone through the intensive process of getting cleared to go after defense contracts, including classified work.
On Being a Young CEO "My father always says, 'If you don't accomplish something great by the time you're 30, you're never going to accomplish something that great.' That kind of always inspired me."
DONNA FENN is the author of Upstarts! How Gen-Y Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.