They say that youth is wasted on the young and that with age, comes wisdom. But what if unbridled, youthful enthusiasm, not sage wisdom, holds the key to our future economic prosperity? What if the elder statesmen of the business community have seen too much and young, starry-eyed entrepreneurs, just the right amount -- having seen so little?
These are a few of the questions we're left with after aggregating the latest third-quarter figures from The Startup Confidence Index in conjunction with our partner the Kauffman Foundation. The findings are based on a nationwide survey of LegalZoom clients who started their business within the last twelve months and are important because economic growth depends on entrepreneurial innovation and expansion, according to research conducted by the Kauffman Foundation.
Declining economy, rising confidence
It appears that fears of European contagion, the fiscal cliff, taxes and the Facebook IPO fiasco have eroded confidence in the general economy. Looking comparatively at previous quarters, most age groups believe that the general economic health is declining.
18- to 30-year-olds, on the other hand, see the world in a different light. Instead of believing that the economy will deteriorate, they believe that consumer demand will increase.
Compared to three and six months ago, we see older entrepreneurs' confidence in their businesses' success declining significantly, while at the same time we see younger entrepreneurs' (18-30-year-olds) confidence rising in their own businesses.
In fact, nearly 100 percent of the 18- to 30-year-olds are confident or very confident that their businesses will realize greater profitability in the next 12 months, compared to 83 percent of the 31- to 40-year-olds. This signals the emergence of a significant optimism gap between older entrepreneurs and those between the ages of 18 and 30.
Stay calm and carry on
Is this trending gap born out of the guarded pessimism that comes with experience, the reckless optimism that comes with inexperience, or both? The reasons themselves don't so much matter, as the facts point to an economic shift in the coming years, one in which the country's youth assume entrepreneurial leadership.
I remember my own start-up experience, back in the first internet bust of 2000, like it was yesterday. We were young, naive, confident and ambitious. I didn't own stocks, so 400 point losses on the Dow and Nasdaq amused me. I didn't own a home, so falling prices meant that I could buy one more cheaply in the future. I'd never been at a job for more than three years (and hated my current one anyway), so who cares if I was let go?
Instead, all we saw was opportunity. There was an unmet need, and people were looking for a more convenient and less expensive alternative. We found very talented people (newly unemployed) who were suddenly willing to help us for pizza and the promise of stock options. We would deal with obstacles when they came and not worry about charting the details of our course for the next 10 years. We pledged to be smart, flexible, and most importantly, to work as hard as possible so that we'd never have to beg for our old jobs back!
Entrepreneurs are successful precisely because they chart their own path, take risks and worry only about the alpha (but not beta). As an "older statesman" now, it sometimes gets harder and harder to remember these lessons from our youth. But in my heart, I know they hold the key to success -- not just personally, but for the economy as a whole as well.