Who Are Those Guys?

Paul Reynolds is the kind of graying-at-the-temples, soft-spoken academic who in another age would have worn patched tweed jackets and smoked a pipe. About a decade ago--he was then at Marquette University--he hit on the idea that would define his academic career.

America was already experiencing a resurgence of entrepreneurship, and companies seemed to be sprouting up all over. But how widespread was the entrepreneurial urge? Young businesses didn't show up on anybody's censuses until they had been in operation a while or until they reached a certain size, so nobody knew how many might be in gestation or early operation. Reynolds, a sociologist, began surveying random samples of adults and simply asking them, Had they started their own business recently? Or were they launching a start-up--and if so, what specific steps had they taken? Soon Reynolds moved to Babson College in Wellesley, Mass., and other scholars were joining his effort. The Ewing Marion Kauffman Foundation of Kansas City, Mo., signed up to help finance some larger-scale studies.

The result: a multiyear, multinational, ongoing research project known as the Global Entrepreneurship Monitor, or GEM, which counts (in effect) the number of working-age adults who are engaged in acts of company creation. GEM has come up with some startling findings. In the United States, according to the most recent data, some 11.3% of the working-age population are either running a young business--less than three years old--or are actively trying to start one. Since there are about 180 million Americans between 18 and 64, that means more than 20 million of us are prospective entrepreneurs. Even allowing for a healthy number of wishful thinkers in the bunch, it's a good-sized group.

As Butch said to Sundance, who are those guys? Many of the company starters, of course, aren't guys at all. Though men outnumber women in these ranks by about 60 to 40, that leaves maybe 8 million female entrepreneurs along with 12 million males. Compared with the general population, more entrepreneurs have a college education, and proportionally more live in urban areas. Otherwise they are spread out all over--among regions of the country, among income levels, and among ethnic groups. A friend of mine is one of the people who would have answered "yes" to the GEM survey, and his story is probably pretty common in this age of downsizing and restructuring. For 20 years, Bob Grant was a top sales rep for Thomas Publishing, the century-old company behind the famous product guide known as the Thomas Register. But in 2002 Thomas was reorganizing, and Grant began to question his future with the company. Presto: Scarcely six months later he was CEO of Grant Inc., now a rapidly growing marketing-communications firm in the Boston suburbs.

What all this means, of course, is that entrepreneurship has become an accepted occupational choice in the United States, occasioning a continuing boom of company building that fluctuates modestly with economic conditions but persists at a generally high level. Part of the boom is attributable to today's technology: The ubiquity of personal computers and the Internet gives company builders market-access and information-processing capabilities they couldn't have had 25 years ago. And part is surely attributable to corporate downsizing, which has provided a cadre of experienced businesspeople such as Grant to undertake the building of new companies. But by now this is a self-sustaining phenomenon. Entrepreneurship is taught in more than 1,500 colleges and business schools. It is supported financially by millions of people. To imagine that many of those eager company starters are suddenly going to go out and get a real job--well, it strains credulity. Opportunities are limited? Tough: Guess they'll have to create their own.

As to how they're likely to go about creating opportunity, some will do what entrepreneurs have always done. They'll hit upon a hot new concept in restaurants, say, or in toys, or in clothing. They'll target a growing market, such as the burgeoning Hispanic population. But what we have learned in recent years is that you don't need a lucky hit or an expanding market to create a growing company. What you do need is a smart CEO--one who understands how entrepreneurial businesses can carve out niches in today's economy right under the noses of larger competitors, simply by playing to their own strengths. One such strength is the ability to pursue certain kinds of innovation. A second: the ability to create a company that people actually want to be part of.

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