[Editor’s Note: There’s been so much doubt and hysteria surrounding the recent economic downturn that few have turned their eyes to the opportunities actually being provided by the crisis. Below, venture capitalist Pascal Levensohn explains why he’s more optimistic about the startup climate than ever. He also cites a counter-intuitive Harvard Business School study on employee motivations that he says predicts some shakeups in the coming months and year.]
Is it possible that tough economic times actually make entrepreneurs feel less inhibited? Freer to duck out of negative or stifling situations to pursue concepts of their own? From my perch as managing partner at a venture capital firm, I see it happening. And this unbound spirit has been confirmed by a recent study showing that business professionals are prioritizing power and autonomy over financial gain. Interestingly, the results can be broken down by gender too.
The survey data, gathered by Dr. Tim Butler and professor Noam Wasserman at Harvard Business School, indicates that young entrepreneurs between ages 20 and 29 in particular (think prospective Silicon Valley startup leaders) are more motivated by power and influence (men) and autonomy (women) than a hefty paycheck. In fact, money ranked ninth for females in this age bracket — fourth for men. Here’s a brief summary:
Motivators for female & male entrepreneurs, ages 20-29
|1. Power & influence||1. Autonomy|
|2. Autonomy||2. Power & influence|
|3. Managing people||3. Managing people|
|4. Financial gain||4. Altruism|
|(9. Financial gain)|
The numbers for older entrepreneurs reflect roughly the same attitude. Autonomy remains the top concern for women across the board during their thirties and forties. Shellye Archambeau, chief executive of MetricStream, a Palo Alto, Calif. company that makes management and compliance software, says that independence is a logical driver for women at all ages and could play a major role in their decisions to strike out on their own.
“The data is consistent not only with my own personal motivators, but what I hear from my female peers,” she said on a panel held as part of the Forum for Women Entrepreneurs & Executives in late October. “Autonomy gained from entrepreneural pursuits affords us the ability to integrate our professional and personal priorities, despite working longer hours, in a way not achievable in the typical corporate role.”
It appears that men also grow to prize autonomy in later decades, perhaps as they become more focused on family and their personal lives. And this is not the only point at which male and female interests converge over time. Altruism also rises in importance, and new job qualities like work variety and intellectual challenge enter the mix. Notably, financial gain never rises above no. 3 on the list of priorities for both men and women in their thirties and forties. In fact, it never breaks into the top four for women. Here’s a quick rundown showing how priorities evolve:
Motivators, ages 30-39
|1. Autonomy||1. Autonomy|
|2. Power & influence||2. Altruism|
|3. Managing people||3. Power & influence|
|4. Financial gain||4. Work variety|
Motivators, ages 40-49
|1. Autonomy||1. Autonomy|
|2. Altruism||2. Altruism|
|3. Work variety||3. Work variety|
|4. Power & influence||4. Intellectual challenge|
So if money is not the force pulling your strings — as seems to be the case with many business-minded individuals today — what’s to stop you from diving into the entrepreneurial pool sooner than later? In my 14 years of experience in venture capital, I’ve seen more people decide to leave even secure corporate jobs during tough financial times. With everyone making less money, a downturn tends to underscore other, less quantifiable interests. As talk of snowballing layoffs circulates through large corporations in the Valley and elsewhere, more professionals are feeling uneasy about their futures. For long-time loyal employees, doubt can fuel simmering feelings of frustration and personal angst. Perhaps just enough to decide to do something about it.
In this context, an economy characterized by climbing rates of unemployment, scarce credit and a shaky stock market may set just the right stage for an entrepreneurial surge. As a businessman myself, I believe there’s no better time to start a company than when the playing field has been leveled by broad macro-economic factors. Suddenly, what may have seemed impossible is now very likely. Sure, venture funding may be a little tighter in some areas, but burgeoning businesses will have access to cheaper facilities and a greater pool of talent to choose from. Beyond that, founding a new company today that stimulates e-commerce will pour unused capital and spending power back into the flagging economy — renewing it just in time to infuse your enterprise’s later-stage growth.
Perhaps the moral here is for policymakers in Washington. If America is going to find a positive and self-sustaining way to grow coming out of this crisis, it’s going to have to support the innovation-sector companies that create jobs. With this in mind, I am certain that great new companies will emerge from this period of turmoil and continue to succeed once it subsides. Crisis breeds opportunity, and the government and VC community will have to follow suit.
Pascal Levensohn is founder and managing partner of Levensohn Venture Partners, a San Francisco-based information technology venture capital firm. He is a member of the National Venture Capital Association’s board and chair of its education committee. He blogs at pascalsview and podcasts at VC-InsideOut.