It’s a pretty good time to be an entrepreneur. Startup funding is abundant. Stories of successful entrepreneurs make headlines on a daily basis. Technological innovation has opened the door to countless opportunities, and more free resources are available to prospective entrepreneurs than ever before. Supported by our ongoing capitalist values and the mutual support of seasoned and novice entrepreneurs alike, I think it’s fair to say we’ve built a thriving startup culture.
But as with most cultures, ours isn’t perfect. We aren’t doing everything we can to support new entrepreneurs, nor are we doing our part to create a culture that’s both efficient and sustainable. There are serious obstacles that need to be addressed, or we’re all going to pay the price:
1. Funding is lumping toward established enterprises. As I’ve written before, startup funding is more plentiful than it’s ever been before — but that doesn’t mean it’s available to all entrepreneurs equally. Instead, it’s lumped together to fund only the biggest, best-established, most promising businesses. This makes logical sense for the investors; you obviously want to invest in the companies with the highest proven chance of success. However, this means there are disproportionately fewer opportunities for entrepreneurs who haven’t been able to attract an initial client base or following on their own. This is also discouraging to new entrepreneurs, artificially limiting the pool of potential innovators who could be driving our economy forward.
2. Entrepreneurial diversity is lacking. We’re making some good progress when it comes to diversity among entrepreneurs, but minority and women business owners are still disproportionately absent compared to white males. Similarly, the rate of serial entrepreneurship means that a surprising majority of new businesses are started by seasoned business owners, rather than by new blood. The end result is limited potential; new types of entrepreneurs from many different backgrounds will lead to new perspectives and new ideas. Otherwise, we’re bound to our old standards and a restricted pattern of growth.
3. Replication trumps inspiration. Unfortunately, our startup obsession has led to the institution of certain stereotypes, tropes, and structures. Think of the typical startup’s company culture, and you’ll probably think of a bunch of young guys and girls in casual, hipster-inspired clothes with Macbooks on sofas and a ping pong table in the break room. Beyond culture, most new startups are merely reimagined versions of previously successful apps and ideas — think of all the social media platforms that have cropped up, or how many Uber-like businesses have struggled for relevance. This is because we nurture replication more than inspiration; we’re more prone to favor ideas similar to ones we know are successful than to gamble on something entirely novel. As a result, our collective inspiration is stifled.
4. Innovation is dying. In the words of Neil DeGrasse Tyson, “Society has bigger problems than what can be solved with your next app.” Basically, the drive to create the latest-and-greatest technology often has more to do with refining the efficiency or entertainment value of minutiae, like organizing your notes better or finding more hilarious ways to prank your friends. This stands in stark contrast to technological innovation for solving issues like poverty, hunger, and discrimination, or scientific pursuits like artificial intelligence development or interstellar travel. This isn’t to say these pursuits aren’t being addressed or developed, but they’re certainly less sexy and less popular than the latest fun app for your mobile device. If we want to prolong our success as a culture and a country, we need to do more to incentivize these kinds of innovation.
5. The stigma of failure. In our Western, capitalistic culture, there exists a persistent stigma of failure. To fail is to have disappointed, and is associated with negative feelings. Moreover, failure is often seen as permanent. Rather than exploring the roots of this cultural perspective (which are numerous), what’s important is that we examine its effects; because failure is something to be feared, fewer prospective entrepreneurs move their plans forward, fewer existing entrepreneurs take risks, and fewer “failed” entrepreneurs ever try again. Instead of stigmatizing failure, we should be celebrating it; only through failure can we learn from our mistakes, adapt, and eventually move forward.
Entrepreneurship isn’t about one person becoming rich. The Kauffman Foundation describes startups and small businesses as the single biggest factor responsible for job creation (and therefore, economic growth). If there’s a problem in our startup culture, it means there’s a problem in our economy, and it must be corrected if we’re going to continue along this path. I love being a part of this culture — both as an entrepreneur in my own right and as a supporting player — but I can’t address these obstacles alone. We have to work together if we want to change the climate.
For more content like this, be sure to check out my podcast, The Entrepreneur Cast!