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Millenials to the rescue! Young entrepreneurs could save Madison's economy

Credit:Sharon Vanorny photo / Peter Benck styling

Those damn kids. They got trophies just for showing up, won't move out of the house and are always on their phones. They studied dance and philosophy and wonder why they can't get a job. They all want to save the world, as long as they can do it from their mom's house in pajamas and on Twitter.

We Millennials, born between 1980 and 1999, have endured the stereotypes. It's not so bad. Our parents were called pot-smoking hippies.

What's worse is our generation's fiscal future: a lifetime of economic scarring. We'll have fewer jobs, lower wages and be the first American generation to make less than our predecessors. And it's not our fault.

Yes, our world is in the midst of flipping over, but all we've ever known is chaos and innovation. We're just right for an entrepreneurial shakeup.

We will be forced to create many of our own careers. Changing technology, shifting industry realities and evolving consumer demands: We're closest to the trends and we have less to lose. We're ready-made entrepreneurs. We're more independent than previous working generations, scoffing at dress codes, 8-to-5 workdays and hierarchy. We want to do things on our own terms. That's not a bad thing. Find me a revolution born of conformity.

The timing couldn't be better: Our entrepreneurial spirit can help boost an economy that needs entrepreneurism. Amid the trillion-dollar student debt, a hobbling job market and economic trouble across the globe, Millennials have reason to be optimistic. Even in Wisconsin.

We have young entrepreneurs in the state. And it takes entrepreneurs to make entrepreneurs. To attract and keep more, the setting must be right. There's a unique, nearly predictable culture associated with Millennials who start a business.

These entrepreneurs are influenced by an area's lifestyle, support network, housing stock, workspaces, cool factor, availability of venture capital and attitude toward startups. If these elements are positive, they can offset regional drawbacks, like a small urban area and cold weather.

Here in Madison, we're at risk of failing to capitalize on the ingenuity generators that draw people to the area. Our community sees a disproportionate influx of research dollars, brain gain and young blood. But bigger towns are doing a better job of getting ideas to market, harnessing the Millennial attitude and keeping entrepreneurs for the long haul.

If we want to take advantage of this economic storm, we need to create a Millennial market in Madison.

Gen Why

Most startups are founded by people over 30, not under, and there's been a decline in the survival rate of these businesses.

But there's a movement here trying to make entrepreneurship more accessible and younger. That's nothing to scoff at. The potential of a few companies hitting it big could change the area's standard of living.

"American Family was a startup on the Square 86 years ago. Most people don't know that," says Zach Brandon, president of the Madison Area Chamber of Commerce. "You can see what can happen if these companies are identified and accelerated and celebrated."

"Large existing firms tend to shed jobs, research has found," Antonio Regalado wrote in MIT Technology Review last month. "At least in the United States, net job growth comes from startup companies, especially the kind that explode from a few employees to several thousand."

Forget experience. Millennials are helping found and run these same startups.

Millennials are 27% of the U.S. population, but a slightly larger chunk of the entrepreneurial community. Twenty-nine percent of all entrepreneurs are between 20 and 34 years old.

And at 80 million strong, the Millennial age cohort is the largest in history, according to the U.S. Census Bureau.

Surveys have shown that Millennials would like to see barriers eased to launching a business, starting with easier access to education and relief from the largest student loan debt in history. Thanks to that debt, we're the most educated generation in history, and undeniably the most connected and tech-savvy.

We shouldn't invest all economic growth efforts in attracting trendy, plaid-wearing programmers, though. Following fads is not a sustainable model for growth. But neither is ignoring the next generation of business innovators and the resources they want.

According to the Wisconsin Angel Network, which tracks business investment statewide, at least 23 of roughly 73 recently funded ventures from the Madison area were founded by Millennials. These early-stage ventures, classified as young, growing companies, can be hard to track, as many don't receive outside funding early on.

There is value in understanding what Millennial job seekers and job makers alike expect of a community. This tech-native generation is different, just as the generations before were different from their parents.

There are three keys to the shift already under way regarding local Millennial entrepreneurs. The local 'trep community has to be made visible. There must be greater effort to recruit and retain people with entrepreneurial potential. And there must be a density of this new brand of entrepreneurs in order to put Madison on the map.

The changing face of business

Maison Gustke is a Millennial and an entrepreneur. The 23-year-old started her commercial photography business with a $10,000 small-business loan and helpful parents.

Maison is the model Millennial Wiscontrepreneur. Badger alumna, Waupaca businesswoman, mild Wisconsin twang. She dabbled in photography in college, spent some time in Turkey and decided to self-employ.

This is not to imply that all Millennials can turn a profit on their passions. What Maison does represent is the changing face of business and the entrepreneurial environment.

Photography isn't new, but Maison is a child of the Internet and makes extensive use of newer technologies, including social media, to promote and grow her business. Most entrepreneurs in this country continue to be middle-aged white men with years of experience in an industry. Recent grad Maison is not part of that group.

There are reasons Millennials have turned to entrepreneurship, says Allen Dines of the UW-Madison Office of Corporate Relations: "They've seen parents lose jobs and have trouble transitioning.... They've seen how important the Internet is."

And they see work as part of the larger social fabric, says John Surdyk of the UW School of Business.

"Profit maximization is not enough," Surdyk says. "There's also this notion of creating social value or solving a problem."

"It's not the entrepreneurship of 25 years ago, where the goal is to make as much money as possible selling widgets," adds Adam Braus, cofounder of half a dozen active ventures in Madison, including ArtUp Weekend. "It's not that easy anymore. Now entrepreneurship is about learning about your fellow man and creating something they value."

"I don't think our personalities are more entrepreneurial. I just think it's the circumstances and the ease of starting," says Nate Lustig, a 27-year-old who founded several companies in college and after, including Entrustet and Exchangehut, and who now works in Chile.

We Millennials have grown up curating our own online personas and piecing together new technology to serve our objectives in a changing world. And we'll do it anywhere, anytime, on a tiny glowing screen.

This same new technology makes it easier to pursue passion. But monetizing that passion doesn't come easy. My collaborative blog began as an outlet for writing. After a year of doing generational research for, I don't expect to make more than beer money off the site.

Premature gray hairs

Not all Millennials are suited to be entrepreneurs.

"There are too many cheerleaders out there saying everyone should be doing a startup and it's easy," Lustig laments via Skype from Chile. "That is really, really bad, both to entrepreneurship and the people doing it."

The images from the film The Social Network, where Facebook Inc. jumps from a pizza-filled California bungalow to a cement-and-glass modern office in a scene change, underplay the drudgery of even the smallest app development. Putting your blood, sweat and treasure on the line for an idea and a livable income is borderline neurotic.

Still, it makes sense that the beginning of professional life is a good time to test out a plausible venture and engage in such craziness.

"I would make more money working a regular job and using my degree," says Matt Howard, 23, cofounder of the food-ordering company EatStreet. "I don't pay myself that much."

Howard acknowledges that securing $2.7 million in outside funding has likely contributed to a few premature gray hairs. But he wouldn't change anything.

"I don't dread the day if my company were to fail. I dread the day I would have to work for somebody else."

When asked if he would move his company to the Bay Area or New York, Howard pounds the table and grins, declaring he wants to stay in Madison.

'It's not just tech'

Heather Wentler, who started the Doyenne Group to promote female entrepreneurship, talks about feeling left out as a non-tech startup in the area. This despite being married to the founder of Sector67, a collaborative community space mostly filled with tech-savvy ideas.

"If it's called High-Tech Happy Hour, who do you think will show up?" Wentler asks.

Others recognize the value of an all-encompassing startup community.

"It's not just tech," the Chamber's Brandon says. "The founders are largely tech, but bricks-and-mortar entrepreneurs are also part of attracting that demographic."

From Ian's Pizza to Merchant restaurant to the new Colectivo Coffee on the Capitol Square -- which has fast become a de facto conference room for Millennials to talk business -- there's a recognizable spirit that helps stamp a city as "startup-friendly."

Companies look for reasonable levels of regulation and affordable taxes, but they also want to do business in a place where their employees like to live. Biz-conscious Millenials want to be where there is a collaborative, supportive business community and living environment.

Madison might be small and cold, but it has enormous advantages over comparably sized municipal areas, and even some larger ones.

Surdyk talks about chatting up the secretary of the old state commerce department at a tech-related happy hour, blocks from the Capitol.

"In San Francisco you would never have that kind of access to Sacramento," Surdyk says. "You're in this very tight space able to live together. New York, Boston, it doesn't happen that way."

According to Surdyk, the momentum for fostering entrepreneurship has swung from the UW and its business school to the young startup chiefs already in the real world.

Collaboration Nation

"Wisconsin may be a little late to the game," says Troy Vosseller, cofounder of Sconnie Nation clothing and gener8tor, a startup accelerator. He's referring to the environment for startups here.

Vosseller describes this environment in oceanic terms. "Wisconsin's problem is there are not enough fish," he says. "We have to hatch more fish." He wants the best fish to grow into "whales": large corporations and recognizable business success.

What will it take to turn fish into whales?

Part of the secret is creating a community of entrepreneurs. Madison's players have teamed up to show off their flair for collaboration in a proposed 80,000-square-foot coworking space, generator and traditional office building in the former Mautz Paint warehouse on East Washington. The venture, dubbed StartingBlock, sits smack dab in a proposed east side "web district."

Madison will not become a replica of startup havens like Austin, Texas, in part because "Austin is 280 square miles, Madison is 77," says Scott Resnick, Dist. 8 alderman and VP of Hardin Design & Development.

But Madison can forge its own path. StartingBlock and the myriad downtown coworking spaces represent all the elements of increased Millennial entrepreneurism: visibility, density and recruitment/retention.

As Vosseller notes, "Who's born in Palo Alto!? People go there."

UW pushes the pendulum

The Wisconsin Angel Network found that Wisconsin underperforms (PDF) in translating academic research into financially lucrative business opportunities.

There are ways to share the ideas coming out of our schools -- including the University of Wisconsin, one of the top research institutions in the world -- to help business people. For a school in the top five nationwide by number of graduate students, the UW could be focusing more on recruiting entrepreneurially minded students and fostering the prospect of invention.

Indeed, the university has begun to create entrepreneurial outlets for its undergraduate students, including classes, the Entrepreneurship Resource Clinic, a job fair for startups and a floor in Sellery Hall for 60-plus students each year dedicated to living in an entrepreneurially focused community.

Michael Filbey, who will be a UW senior, enjoyed $70,000 in sales last year for his business Cbay. "It wouldn't have happened without Madison, undoubtedly," he says.

It makes sense that students would be looking for economic opportunity so early on. In 2013, Millennial unemployment had risen to 13.6%, well above the national average of just under 8%.

Half to two-thirds of Millennials are interested in entrepreneurship, and more than a quarter are already self-employed, according to the U.S. Chamber of Commerce. As Wisconsin continues to fret about how to create a business-friendly community, it's about time we start paying attention to the kids.

Jamie Stark blogs about generational issues and Gen Y at Contact him there or follow on Twitter @JamieStark.

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