- Almost two-thirds of Gen Z Americans have started, or intend to start, their own business.
- Nearly half of Gen Z, about 48%, have numerous side hustles, compared to 34% of small business owners.
- New business formation boomed since the pandemic, but it was as much a story of necessity as opportunity.
For decades Microsoft has been associated with a traditional definition of office work, long hours in front of a computer, but now the corporate enterprise giant finds Gen Z entrepreneurs disrupting ideas about workplace hustle and the traditional 9-5 day. Many recent Gen Z college graduates are flipping the career paradigm and pursuing entrepreneurship rather than entering the corporate world.
"We've seen a lot of reimagination during the pandemic and a lot of digital transformation, which I think really has propelled what we see as a bit of a boom in entrepreneurship," says Travis Walter, vice president of retail at Microsoft Store. Almost two-thirds (62%) of Gen Z has indicated they have started, or intend to start, their own business, according to data from WP Engine and the Center for Generational Kinetics. Meanwhile, in 2021 alone, 5.4 million Americans submitted applications to start their own business, according to government data.
The traditional idea of "hustle culture" has evolved over the years, and while the grind Gen Z puts in looks slightly different than millennials, it doesn't mean they're doing any less work. Instead, these entrepreneurs wear multiple hats with flexible work schedules, working vacations and more consideration for personal time. Nearly half of Gen Z, about 48%, have numerous side hustles, compared to 34% of small business owners, according to Microsoft's survey, conducted by Wakefield Research across 1,000 small business owners with less than 25 employees. Many of these businesses overlap with the rise in social media marketing. Entrepreneurs who use TikTok for their business (48%) are almost twice as likely to have multiple side hustles as those who do not (27%), according to the Microsoft data.
"I think it's important to let people work the way they need to work because then they can actually do their best work, as we're seeing with entrepreneurs and Gen Z," Walter said.
Microsoft's data shows 91% of Gen Z entrepreneurs work unconventional hours; 81% say they work on vacation, compared to 62% of business owners overall.
"What do I truly want to do?" is a question being asked more frequently, according to Philip Gaskin, vice president of entrepreneurship at the Ewing Marion Kauffman Foundation. "That's some of that Gen Z energy," he said.
Gen Z graduates are coming into the workforce during the pandemic period of "rediscovery," Gaskin said, a reevaluation of personal and professional goals by many Americans across generations. Some people who may have been bored of their corporate jobs, or felt stale at a point in life, were given the time to pause and reevaluate. Many people who saw an opportunity went for it during the pandemic, often with new technology ideas. The boom in new business formation isn't uniformly a rosy scenario. In some cases, it is a function of necessity, according to Kauffman's analysis, with people who lost their jobs needing new forms of income.
This shift is correlated with a rate of new entrepreneurs that has been growing for several years, with 2020 showing the highest spike of all, according to Kauffman Foundation data. And it has big implications for the labor market. "Most jobs created over the last five years were provided by firms less than five years old," Gaskin said.
Gen-Z is also leaning more towards the entrepreneurship path rather than getting involved in corporate America right out of college because many see it as a way to fast-track their retirement. About 61% of Gen Z small business owners believe they will be able to retire faster than if they had gotten a corporate job, compared to 40% of all small business owners who hold this view, according to the Microsoft survey. Among the broader small business community, amassing retirement savings through investment vehicles has historically been a challenge and much of their income directly reinvested in the business, which has provided reason for concern about financial security among entrepreneurs.
Mission-driven, problem-solving Gen Z entrepreneur
Ritwik Pavan, a Gen Z entrepreneur, has already started several businesses.
"I've been on the entrepreneurial journey since high school, and I always wanted to build something because I always had the problem-solving type of mindset," Pavan said.
The big idea he landed on after working in various tech niches, including app development, since college, is in urban mobility.
With co-founders Matthew Schaefer and Christian Burke, he launched Vade in 2018, which helps reduce traffic congestion and carbon emissions by providing real-time parking data for citizens.
"I'm helping all these people solve problems and build their ideas, but I'd love to go find something I'm passionate about solving and for me, that problem was parking," Pavan said. "The best part about being an entrepreneur is that we're very mission-driven and believe that what we're going to do is going to change lives for the better and help cities become better places to live," he said.
According to the Microsoft survey, around 88% of all small business owners who prioritize social good say it helped their business grow, including 82% of Gen Z respondents.
Pavan is an example of how work hustle has changed. His favorite part about being a small business owner is the flexibility that comes with the job, but that doesn't mean working fewer hours than a corporate boss like Jamie Dimon or Elon Musk demands.
"The truth is, as a founder, for the first three years me and my co-workers were working 18-hour days, even 20 hour days, even now sometimes," Pavan said.
But being able to make decisions for your own company, he says, makes the long hours worthwhile, even if that also means being responsible for the bad ones. According to the Microsoft data, many Gen Z entrepreneurs start this decision-making, like Pavan, before college, and many don't see a degree as being critical to their success: 78% of Gen Z entrepreneurs say a college education is "not very necessary" for them to run a business.