Graduates face radically new 'entrepreneurial capitalist' economy, says foundation CEO

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These days, Cornell graduates might be just as likely to start their own businesses as they are to get married or have children.

That's one reality of the new economy, said Carl Schramm, president and CEO of the Kauffman Foundation, to about 400 people Oct. 2 in Statler Auditorium.

Schramm, who visited campus as part of the Entrepreneurship@Cornell speakers series, spoke about the myriad opportunities and challenges for today's graduates, who face a much different working world than their parents.

If students were to quiz their parents, Schramm said, they would find that few of their parents knew what the word "entrepreneur" meant when they were in their 20s. That was the era of lifetime employment with one company, of strong unions and big businesses, when the goal of a college graduate was to find a job with a big company like General Electric or Pan Am airlines.

Today's graduates will take part in what Schramm calls "entrepreneurial capitalism," a radically new economy brought about by a series of random occurrences in the early 1980s, such as the collapse of some of the country's top companies, the era of junk bonds and the ensuing creation of 401(K) plans to support workers and venture capitalism to create new businesses.

Today, instead of an average of four jobs in their lifetime as their parents might have had, grads can count on having four jobs by the time they turn 30. And it's not because they're getting fired -- it's that they can pick and choose what makes the most sense in their personal careers, he said.

Today, instead of major job creation by established companies, more than half of new jobs are in companies younger than five years old. And instead of research and development conducted in the back offices of large corporations, the real technological innovation is coming from universities and from small companies.

"You are walking by buildings every day in which the ideas of the new economy are forming," he told the students.

All of these factors make the prospects for a graduate exciting, but also a little scary.

"For most of you, you will be able to pick and choose your jobs," Schramm said. "But there's a dark side to that, too. You can't sign up to be a lifer. Companies will be interested every day in what you can contribute and what you've done.

"You are in the business of brand management every day," Schramm said. "And the brand is you."

The other reality of the new economy, Schramm warned, is that it is dynamic. His talk, he said, won't be relevant 30 years from now.

"I've always felt that true wealth, innovation and production in our global economy are based on human capital and intellect," said Ernest Meadows '11, in agreeing with Schramm's emphasis on the importance of each person. "The higher-ups need to invest in our society and think about what it can be." Meadows said he would like to someday start a nonprofit to promote the innovation and potential of inner-city youth.

The Kauffman Foundation, founded in the mid-1960s, focuses on advancing entrepreneurship and supporting education for children and youth. It is the country's 26th largest foundation, with an asset base of about $2 billion.

Kathy Hovis is a writer/editor for Entrepreneurship@Cornell.