A couple of years ago Inc. Editor in Chief Eric Schreiber wrote that I sound "vaguely Churchillian" when describing my favorite observation about our current economy:
"Never before in history has it been so easy for so many entrepreneurs to create such rapidly growing companies with so little capital and sell them so early for so much money."
This single sentence not only sums up why this is the best time ever to be an entrepreneur but also identifies the best hope for the future growth of our entire economy.
To hit the point home further, here are three reasons why startups have an upper hand these days:
1. Big companies have lost the ability to innovate.
Our hyper-connected, global economy is increasingly competitive. Just to survive, big companies have become ever more specialized. New Harvard research from Thomas Wessel explains that big companies are now optimized to be good at growing, or scaling up, businesses. But everyone knows you can't be really good at more than one thing. The tradeoff for these companies is that they've lost their ability to innovate.
This presents an opportunity to entrepreneurs. As smaller outfits tend to be more nimble, they might also tackle problems quicker. That's the essence of innovation.
2. Investors are getting restless.
At the same time, big companies now have more cash on their balance sheets than at any time in history. Many have so much cash that it's a serious problem. Shareholders are mad as hell that the cash is just sitting there earning today's terrible interest rates and isn't being used to build the company. Many are calling for these companies to return some of these funds to shareholders in the form of dividends. Of course, CEOs want to keep that cash on hand in case opportunity strikes and they find business reasons to use the excess funds.
The opportunity to entrepreneurs? Investors are getting antsy and this could help contribute to added investment in their fledgling firms.
3. Bigger bank rolls mean more acquisitions
What's more, big companies with lots of cash on hand can contribute to more mergers and acquisitions. If you listen to these CEOs at the annual shareholder meetings, you'll hear them describe their solution to each of these problems: They plan to acquire more innovative, entrepreneurial companies.
Combined, these drivers are creating an ideal environment for this golden era of entrepreneurship.