Elder millennials have been taught several absolutes about entrepreneurship during their formative years. One is that you start a business to become flush with cash, and your goal is to make the leap from working out of a modest office to leading a Fortune 500 corporation. Along the way, you should achieve rapid growth, seek investor funds, and then go public or be acquired by a titan of industry.
The old guard in the startup realm clings to an image of relentless growth: putting your head down and sacrificing your friends, family, and health for enviable numbers that will eventually get you in the door of Andreesen Horowitz.
But a new charge says “no thanks.” A significant number of millennials and zoomers are declining this grueling, uphill trajectory in favor of other, more satisfying paths to self-employment. They are discovering that entrepreneurship is not monolithic, and does not have to end with venture funding and an IPO exit.
To speak from personal experience, a while back I was trying to make a jump from W-2 employment in the tax services field to becoming a fully self-employed video game developer. My first game studio had a successful Kickstarter campaign back when the concept was still novel in the early 2010s. A year and a half later, an investor expressed interest in taking us to the next level.
The investor ultimately decided not to extend us funding. They envisioned making us into a larger company, releasing at least two major titles a year. We wanted to simply earn back our development costs and make enough profit to sustain the company, compensate our team, and quit our day jobs for good.
At first I felt a sense of defeat, but ultimately it was a good experience. I was flattered that the investor, for whom I have no hard feelings, thought a studio under my leadership was worth his money and risk. I realized the extent of the vast new possibilities available to me in the digital world.
Sonic Toad Consulting and Media was born, and I’ve retained control over my projects and life since. I don’t harbor any resentment toward the investor, but I am glad he did not take us on as a company. It would be like having a job you can’t quit. That’s not why I chose entrepreneurship!
I know I’m not alone in this view. The pandemic era has made it clearer than ever that solopreneurship, tiny operations with just one or two employees, and worker cooperatives are the rising tide diverting the current from a long-held image of entrepreneurship that can be exclusionary, discriminatory, and short-sighted.
It’s a trend that has been long in the making. More women are choosing entrepreneurship than ever to assert control over their lives that corporate employment and C-suite aspirations often cannot deliver. Communities of color, queer people, and disabled people have often turned to various forms of entrepreneurship and cooperatives upon being marginalized out of both jobs and standard capital sources like banks and investors.
The Census Bureau found that 4.4 million new businesses were started in 2020 as the pandemic forced millions of Americans to reevaluate their lives and career plans. Many saw it as a “now or never” opportunity to change careers, and start the small business they always dreamed of. Freelancers who found themselves inundated with clients and opportunities, as events pivoted to Zoom and demand for content and creative services skyrocketed, now had to decide whether to incorporate and form a cohesive brand.
Entrepreneurs who decided to band together rather than fly solo also decided to do so as cooperatives rather than traditional partnerships and multiple-member LLCs, with an eye on transforming gig work like rideshare. Legal obligations are rerouted to serving the cooperative’s members’ needs, rather than the duty to maximize profit for investors as outlined in the Uniform Commercial Code.
In comparison, global venture funding for firms pursuing the traditional path of growth was up 4% in 2020 compared to 2019, according to Crunchbase.
There are numerous virtues to keeping things small: tax and regulatory compliance, for one. The more income and assets that a company must manage, the more daunting it becomes to comply with the IRS and local tax authorities. Expansion into other states and countries presents opportunities for wealth, but also a barrage of increasingly expensive compliance-related headaches. The best lawyers, accountants, and industry consultants can help you, but they don’t come free.
A solopreneur can keep their overhead extremely low, working at home or setting up shop in a shuttered storefront or dead mall for drastically less than what commercial tenants of the past paid for comparable space. When one is not responsible for employees, satisfying investors, or maintaining expensive equipment, it also keeps insurance costs low along with overall liability.
Having control over the creative and operations aspects of your own business is another compelling reason why the next generation of entrepreneurs wants to stay small. An independent game developer can take more artistic risk, and more time for self-care and quality assurance, than a well-funded AAA studio that is under pressure to ride the coattails of another successful title with shorter turnaround time.
Ultimately, more younger entrepreneurs are rejecting the growth-focused business paradigms of yore, simply because the stress of running a large company and pressure to perform for investors is too much. Those who would decline a high-power job to avoid the demands are likely to choose solopreneurship solely to retain ownership over their time, and not spend every waking moment working.
The desire to grow into a large company hasn’t completely been quelled. There will always be entrepreneurs seeking large funding rounds for pursuits that would be impossible to otherwise fund on their own. Of the millions of new businesses rising from the COVID era, some will undoubtedly take this road.
However, the narrative on entrepreneurship has changed. It does not present this type of growth into a be-all end-all. There is both fulfillment and profit to be found in simply keeping the smallest businesses small.